1. Background and Context:- The Gauteng Government supported by the National Government is driving a program to revive the economy in the major Townships around Gauteng. The Government is concerned about the impact that formal retailers and foreign nationals are having on township retailers. This matter has become the subject of an investigation by the Competition commission into the competitive landscape in the retail industry. The Gauteng department of Economic Development (GDED) is driving the program and is working with Formal Retail. Pick n Pay has publically committed to the following initiatives: a Local Supplier Development Program The launch of a Township “Spaza/Micro Retail Franchise”. a “Spaza” buying group 1

2. 2

3. 3 Guiding Principle

4. 4

5. PnP Townships 5 Supplier development program Introduction The Enterprise and Supplier Development Division has three specific aims, which are to:  Increase local procurement by accelerating small suppliers into the supply chain.  Improve and develop great quality and range of local products at competitive prices.  Provide small producers a national platform by increasing access to national and regional markets.

6. 6

7. 7 Monageng Market The Good Story

8. PnP Townships Process PnP Spaza Express concept POC- Monageng Market Joint Visits with GDEP in Soweto. Solly Legae identified as potential trial member. Partnership with existing successful Franchisee. Partnership with PnP Vendor Base. Refurbishment and conversion sponsored by PnP and GDEP Training and development completed. Monageng Opened 25 February 8 Spaza Conversion Program

9. Monageng Butchery 9

10. 10

11. Monageng Butchery 11

12. Monageng Butchery 12

13. 13

14. Monageng Market 14

15. Monageng Market 15

16. Monageng Market 16

17. Monageng Market 17

18. 18

19. Monageng market - AFTER 19 Sales increase - 250% Profit increase -300%

20. Monageng market - AFTER 20

21. PnP Spaza Concept What does this cost: 21 ActivityCostFundingUpdate Building R150,000.00Grant or Financed by FranchiseeFunding by GEP/ABSA/SEFA EquipmentR365,000.00Financed by FranchiseeFunding by GEP/ABSA/SEFA IT Cost R295,000.00PnP Retailers SponsorNon Repayable Opening StockR50,000.00PnP Retailers SponsorNon Repayable Training and Development R50,000.00PnP Retailers SponsorNon Repayable TotalR910,000.00

22. Monageng Market PnP Spaza Express concept – Monageng Market, Soweto 22 Lessons LearnedMitigating action 1GDED Participation Committed Partnership invaluable Funding and Grant crucial to success. Relationship important for community support. Ongoing Support 2Operations and store execution Larger focus on operational training required SAP skills and capability must be ensured Disciplines and KPI’s agreed and managed More than normal FBM supervision required 3Price Competitive pricing crucial Customers highly informed and price sensitive Fewer price changes Deep cut promotions 4Range Range review and aligned with greater market. Target number of SKU’s +- 800 Grocery products Larger stores will carry more categories.

23. Monageng Market 23 Compelling Reason to Convert 1Conversion Pick n Pay know how. Pick n Pay Buying power for equipment Regional and National Support 2Product Access to 30,000 PnP listed products Access to PnP Marketing Machine PnP Cost price and Promotional Negotiations PnP Money Market Services 3Logistics Daily deliveries 7 days a week 4Training and Development In store Training – Protea Glen Systems and Technology Store Operations Finance and Accounting Entrepreneurial Development Program Ackerman foundation SETA accreditation 5On Going Support Regional Support team National Specialist team System Support 6Finance Pick n Pay IT non refundable Contribution R295,000 Pick n Pay Opening stock contribution R50,000.00 Pick n Pay Franchise Funding Partners

24. PnP Townships Current Status PnP Spaza Express concept POC- Monageng Market Monageng Opened 25 February 4 Additional sites identified for opening in 2016 In progress with finalising Franchisee selection In progress with the planning and costing of the conversions Focus points: Ranging Pricing Store Operations and Execution Training and Development Full PnP Service offering. Funding – Collaboration between GDED, PnP and Traditional Finance Institutions 24 Spaza Conversion Program

25. Spaza Buying Card Spaza Buying Card – Enabling existing Spaza and the small township trader community to access better pricing and buying power with PnP 25 Spaza Buying Card Progress Smart Shopper Card for Spaza ’s Using existing Smart Shopper Card functionality BIN range of cards to ring fence Spaza buying community Monthly township pamphlet promoting instant savings for core township KVI lines Instant savings and cash off linked to Spaza Smart Shopper Spaza cards Swipe at any PnP store to receive the saving Activation strategy Use Solly Legae as a Spaza ambassador to run with the activation in the Soweto area Spaza summit in partnership with the GDED Soweto Spaza Association and GDED participation Target a maximum of 1000 traders to pilot the uptake and trade activity Rollout in the greater Gauteng area and nationally if successful

26. Corporate StoresFranchise StoreAdditional ChannelsVehicle HypermarketSupermarketsSpaza Buying ClubAll Store Formats SupermarketsLocal FormatStockvelOnline Local storesBP ExpressDotcoza Spaza’s store 26 Pick n Pay Emerging Market Strategy PnP Spaza Concept