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This is how much it costs to own a Spar, Pick n Pay, or OK Food store

South Africans spend a staggering amount of money in retail stores – more than R31,900 per second at last count by StatsSA. This amounts to billions spent at tills each year, and a tidy amount of this ends up in the back pockets of supermarket owners.

If the supermarket sells a fair amount of meat, you can expect even greater profits; this sector of the market contributes more than 8% to total sales, significantly more than other items you’ll find on a typical grocery store shelf.

2020 was an interesting year for supermarkets. As essential services they were among the only businesses allowed to remain open throughout the country’s lockdowns, which means they fared okay, relative to many other businesses and industries, although the ban on alcohol, and the prevalence of Covid-19 in many stores, still hurt the bottom line of many.

If you’d like to get your hand on some of this 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 that taps into existing supply chains and logistics systems.

The supermarket franchise market in South Africa is still relatively small. Woolworths stopped franchising its stores in 2010, and Shoprite, Checkers, and U-Save stores are all corporate owned, although it’s possible to franchise some smaller stores within the Shoprite Group that trade under the OK brand.

Even supermarket giant Pick n Pay keeps most of its operations in-house, although there are several franchised stores that exist around the country.

All of which is to say that if you want to run your own big brand supermarket in South Africa, you’ll need to purchase a Spar, Pick n Pay, or OK.

Purchasing a 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.


Read the full article here: Business Insider 

Article Source: Business Insider

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