Pick n Pay ventures into Zambia

Johannesburg - Pick n Pay Stores [JSE:PIK] is looking increasingly to southern Africa for growth, signalled by the opening of its first store in Zambia on Thursday.

The store - located in Lusaka - is the first of seven planned for the country over the next five years.

"The southern African region represents an increasingly attractive market for us," said group CEO Nick Badminton. "As disposable incomes continue to grow, the region's retail potential remains largely untapped."

Badminton said Zambia offers great opportunities for foreign investors who are willing to enter into partnerships with local communities and government agencies.

"A country which experienced a direct foreign investment inflow of $1.3bn in the first quarter of 2010 deserves to be taken seriously as an investment destination, and Pick n Pay is proud to be part of Zambia's journey towards economic growth, social prosperity and regional respect," Badminton said.

Unlike its archrival Shoprite Holdings [JSE:SHP], Pick n Pay has been conservative in its African expansion plan. Instead, it pursued Australian markets – where it struggled to grow for over nine years until it recently decided to exit. 

Analysts have suggested Pick n Pay could unlock massive value if it were to expand rapidly into Africa, as Shoprite did in the 1990s. However, Pick n Pay prefers stores to be franchised, although the Zambian branch is corporate-owned.

It has operations in Namibia and Botswana, as well as in Zimbabwe through TM Supermarkets. More recently, Pick n Pay has signed up franchise partners in Mozambique, and it is identifying sites for expansion into Mauritius.

"We are very clear that Pick n Pay's major future growth prospects lie firmly in Africa," said Badminton.

 - Fin24.com