Major retailers expanding rapidly
Woolworths, Shoprite Checkers and Pick n Pay are all expanding, but it could cost shoppers dearly.
JOHANNESBURG - Three major retailers on Thursday announced massive expansion plans.
Woolworths, Shoprite Checkers and Pick n Pay plan to open new stores in South Africa and across the continent.
Woolworths opened its 50th Foodstop at an Engen forecourt in Sea Point, Cape Town on Thursday.
The company says the opening is part of its "accelerated plan" to establish another 45 Foodtstops around the country in less than three years.
"Turnover is expected to grow from the current R600 million to over R1 billion in 2016," it said in a statement.
Also on Thursday, Shoprite Checkers celebrated the opening of its 1000th supermarket on the African continent in Kuils River in the Western Cape.
It says the "new generation" store is one of the 129 new supermarkets built between July this year and June 2014.
Just 20 of those stores are in the rest of Africa, leaving 109 new stores for the South African market.
Meanwhile, Pick n Pay opened two premium stores as part of its six-month plan to open 64 shops.
The expansion hints at a healthy retail sector, with each company committing itself to continued growth.
The plans will bring much-needed jobs and create greater convenience for consumers.
36ONE Asset Management analyst Evan Walker isn't so sure.
"I think there are some expansion opportunities but the overall SA dynamic is that the market is becoming oversaturated."
Walker says the expansion rate is far outstripping the gross domestic product, which is around two percent.
He warns that the cost of this expansion will likely be passed on to consumers, who will already feel the pain of high inflation rates across all sectors.
"I think inflation is going to rise. These stores are going to have to put up their prices incrementally quicker to absorb the additional capital spend that's going into this ridiculous space expansion."