This article first appeared in Business Insider
South Africans spend a staggering amount of money in retail stores.
Research by StatsSA in 2017 showed that the retail trade industry contributed R1 trillion in sales to the local economy. In other words, South Africans spent R31,900 per second in retail stores over that time.
If you’d like to get your hand on some of the money passing through retail stores every day, you might be tempted to invest in a supermarket. Taking on the country’s big five supermarkets as an independent retailer would be a brave decision – Woolworths, Pick n Pay, Spar, Checkers and Shoprite hold the lion’s share of the market in South Africa.
But an alternative, that would also share some of the financial burden and assist with the complex logistics of running a supermarket, is to buy a supermarket franchise. Starting a business from scratch is hard but you can take advantage of franchising opportunities like the one provided for by Pick n Pay and other retailers. Have a look at the short course on how to become a Pick n Pay supermarket franchisee
Although Woolworths stopped franchising its stores in 2010, it’s still possible to purchase and run your own Pick n Pay.
Purchasing a Pick n Pay supermarket franchise is not a small investment, and running it is a complex task that will require intensive training. At the very least you’ll need to lay down R6 million for a small supermarket, and if you want to go bigger you’ll need to double that investment.
Pick n Pay started as a family-run business, but has since grown to include 1,795 stores, of which 719 are franchises covering their supermarkets, express, clothing and liquor stores.
After a couple of lean years, things are also looking up at Pick n Pay. According to its latest annual results, the company has increased its turnover by 7.1%, to R86.3 billion.
Of the 552 supermarkets under the Pick n Pay umbrella, 304 are franchises. The floor space of these stores is large – they are, on average, 3000 square metres in size. This increases the complexity of running the business, and pushes up the initial purchase price.
Prospective franchisees must undergo an intensive evaluation, and then complete a two-month long training process prior to taking over a new store.
Franchisees must also purchase a comprehensive operation manual that details all aspects of running the business.
Establishing a new store costs in the region of R10 million. This purchase price depends on the size and location of the store, and the developer’s contribution.
Once the store is up and running, franchisees must also pay a fee of 1.25% of gross annual turnover.
To learn more about how to become a Pick n Pay franchisee then check out the course below: