O&L goes solo:Local supermarkets planned after PnP departure

The Ohlthaver & List Group (O&L), which previously had shops under the name Model Supermarket, is planning on opening its own supermarkets after announcing plans to terminate its franchise agreement with Pick n Pay South Africa.

According to O&L executive chairman Sven Thieme, the current business model is unsustainable, which prompted the decision to part ways with Pick n Pay.

Thieme says a new business model has to be in place to guarantee the future of employees.

“We’re taking the business back to us completely so that we have a sustainable business model, because I can guarantee you when we have the new business model in place, the future of the employees are guaranteed,” he says.

Thieme adds that the business was making a loss, making it unsustainable in the long run.

He says the new business model will take a year to come to fruition.

Answering on whether the country should be concerned about a trend in the company selling off its assets after it sold its majority shares in Namibia Breweries in 2021, Thieme says the company is strong enough to stand on its own.

“There are some partners that are good for certain businesses and certain times, but I think for retail, we’ve realised for sure that we can be on our own. We want to create a business that can even have a chance to actually open up supermarkets outside Namibia,” says Thieme.

The O&L Group, through WUM Properties, trading as Pick n Pay Namibia, owns and operates 19 Pick n Pay branded retail stores in Namibia under a franchise agreement with Pick n Pay South Africa.

This decision aligns with the O&L Group’s vision 2029 aspirations, O&L noted in a media statement on Monday.

In the statement yesterday, O&L said the franchise agreement will come to an end in 2025.

Thieme says the group has formally notified Pick n Pay South Africa of their decision and commits to a 12-month transition period effective 1 July 2024 until 30 June 2025 to ensure a smooth and orderly transition.

“During this time we will focus on minimising any disruption to our employees, customers and business partners. Change is the only constant, and we believe this change will bring growth and innovation,” Thieme says.

Earlier in the year CNBC Africa reported that Pick n Pay expects to report a full-year loss as South Africa’s third-biggest grocer takes a R2,8 billion impairment on unprofitable stores.

According to the report, about R1,8 billion of the impairment is for loss-making company-owned stores that will be closed or converted to either franchises or Boxer outlets, while the rest relates to a reduction in the value of assets of underperforming stores that will remain open.

According to CNBC, the higher debt-service costs and an increase in diesel expenses to run generators to keep operations going during South Africa’s power blackouts contributed to the loss.