Gauteng Department of Economic Development Raises Concerns Over Pick n Pay Market Store Initiative Amid Competition Commission Investigation

By Carol Mohlala

The Pick n Pay Market Store initiative, launched in 2016 in partnership with the Gauteng Department of Economic Development (GDED), Gauteng Enterprise Propeller (GEP), National Empowerment Fund (NEF), and Small Enterprise Finance Agency (SEFA), was once heralded as a game-changer for township businesses. The program aimed to uplift small, independent stores by transforming them into thriving neighbourhood convenience hubs, offering them access to advanced retail infrastructure, supply chains, and systems. However, years later, significant challenges have emerged, prompting an ongoing investigation by the Competition Commission and growing dissatisfaction from government stakeholders and beneficiaries alike.

The initiative was part of Gauteng’s Township Economy Revitalisation (TER) program, a broader provincial strategy aimed at transforming, modernising, and re-industrialising the township economy. It was expected to create jobs and boost local commerce. However, despite initial successes, including daily sales of over R350,000 at the first pilot store, serious operational and financial issues have plagued the project.

Speaking at a recent meeting called to address the mounting concerns, MEC for Economic Development, Lebogang Maile, expressed deep frustration over the failure of Pick n Pay to attend the discussions. The meeting brought together key stakeholders, including representatives from GEP, NEF, SEFA, and the affected store owners, but the absence of Pick n Pay—arguably the central player in the initiative—was seen as a display of disregard for both the beneficiaries and the process of resolving their issues.

“The attitude displayed by Pick n Pay in not attending this important meeting is unacceptable,” said MEC Maile. “We are dealing with real problems affecting people’s livelihoods, and for them to disregard this engagement is to disregard the very people this initiative was meant to support.”

Mounting Challenges for Market Stores

Over the years, numerous issues have surfaced within the Market Store initiative. Beneficiaries have raised concerns about mounting debt, thinning profits, and operational challenges. Problems such as forced overstocking, excessive promotions at the cost of the store owners, high electricity costs, and bullying tactics by Pick n Pay staff were brought to light. Many stores have found themselves in deep financial distress, with two of the seven GEP-funded stores shutting down entirely due to unsustainable debt.

The core issue, as highlighted by the Competition Commission’s ongoing investigation, revolves around Pick n Pay’s management of the initiative. Beneficiaries have accused the retailer of exploiting its control over the IT system used by the stores, automatically ordering stock that wasn’t needed and preventing the stores from sourcing products from alternative suppliers. “One store in Pan African Mall has been resolved, with Pick n Pay compensating the owner, but other cases remain far more complex.”

The investigation remains ongoing, and while the resolution of one case offers a glimmer of hope, it is clear that deeper, systemic issues must be addressed.

Gauteng Department’s Plan for Resolution

Despite the challenges, the Gauteng Department is committed to finding a solution that protects the interests of township businesses and ensures the long-term sustainability of the initiative.

MEC Maile outlined several key actions aimed at addressing the current issues:

1. Engagement with Key Stakeholders: The MEC will write to SEFA, NEF, and Nedbank, outlining the systemic issues affecting the project and urging these institutions to collaborate in resolving them. A case-by-case assessment of each business involved will be conducted to offer tailored support and assistance.
2. Speeding Up the Competition Commission Investigation: Recognising the urgency of the matter, the MEC has requested that the Competition Commission expedite its investigation. “We need clarity and justice for the beneficiaries, and the Commission must move swiftly to resolve this,” he said.
3. Direct Engagement with Pick n Pay Leadership: MEC Maile announced plans to write directly to the CEO of Pick n Pay, seeking a formal meeting to resolve the outstanding issues. The Department believes that top-level engagement is necessary to ensure Pick n Pay takes accountability for its role in the difficulties faced by market store owners.

During the meeting, the GEP presented a report confirming that some beneficiaries received grant funding and that none owe GEP, as these funds were non-repayable. Similarly, NEF shared that it had only funded three stores, halting further expansion due to concerns about Pick n Pay’s management of the model. SEFA, which joined the initiative in 2011, emphasised that the grant funding element was designed to assist with loan repayment.

This financial assistance has been crucial, but beneficiaries continue to struggle with operational costs, debt, and the lack of flexibility imposed by Pick n Pay’s retail systems.

A Path Forward

MEC Maile is determined to resolve these issues. He called for all parties involved to work collaboratively in charting a new path forward, recognising the infrastructure and investment already made in these township businesses.

“The infrastructure is there, the investments have been made, and this initiative must be seen as an opportunity, not a failure. We will not allow these businesses to crumble,” the MEC said.

The Department’s goal is to revitalise the project, ensuring that it fulfils its original mission of empowering township businesses and providing local communities with convenient access to essential goods. However, this will require a coordinated effort from all stakeholders—especially Pick n Pay, whose engagement will be crucial in turning the initiative around.

The Pick n Pay Market Store initiative was designed with the best of intentions, but its implementation has been riddled with challenges that have left township business owners in distress. GDED led by MEC Maile, is committed to finding solutions through continued engagement with all stakeholders, but the road ahead will require accountability from Pick ‘n Pay and swift action from the Competition Commission.

As the investigation continues, all eyes will be on Pick n Pay to see whether it will step up to the plate and fulfil its promise of supporting township economies.

Update: 04 November 2024. MEC Maile met Nedbank’s Chief Executive Officer, Mr Jason Quinn and the Group Managing Executive responsible for Retail and Business Banking, Mr Ciko Thomas, regarding the PnP Township Market Stores and the challenges the owners have been facing.

A steering committee will be formed to individually meet with the businesses that were funded by Nedbank to assess the nature of the challenges they face and to seek ways to assist the stores.