Pick n Pay: Turning fortunes around with innovation and modernisation

With South Africa consumer spending feeling the economic strain, competition among leading retailers remains fierce, with the need for innovation and value for money never higher. One of the main names on South Africa’s high streets and within its malls remains Pick n Pay, a company that continues to evolve and expand.

“Pick n Pay is the quintessential family store focused on the customer,” describes the corporate website. “Since 1967 when consumer champion Raymond Ackerman purchased the first few stores, the Ackerman family’s vision has grown and expanded to now encompass stores in South Africa, Namibia, Botswana, Zambia, Mozambique, Mauritius, Swaziland and Lesotho. Additionally Pick n Pay owns a 49 per cent share of a Zimbabwean supermarket business, TM Supermarkets.

shutterstock_158769677“Our offer to customers focuses on groceries, clothing and general merchandise, but also includes additional value-added services to cater for our customers’ expectations and evolving needs. To ensure a convenient and accessible shopping experience the Group operates across multiple store formats, both franchised and owned.

“For the past 5 years the Group’s core focus has been to strengthen its strong South African retail businesses under the Pick n Pay and Boxer brands, while adopting a systematic approach to expanding into adjacent areas, including geographical growth through the African continent,” the site continues.

The company listed on the Johannesburg Stock Exchange back in 1968 and throughout the intervening years, has adopted a set of values which have stood the test of time, as the company website describes:

“The growth and success of Pick n Pay is attributable to 3 basic principles, which form the cornerstone of the business: Consumer sovereignty; Doing good is good business; and maximising business efficiency.”

It is a set of policies that continues to keep Pick n Pay at the forefront of a hugely competitive market place.

After a challenging few years, the retail giant has enjoyed a positive 2015 on the whole, including the opening of 3 so-called Next Generation stores in its first half, emblems of its turnaround progress and a blueprint for future stores, the retailer said in October.

Advancements achieved across various areas of its business — including logistics, operations and HR — come together in the stores, which have lower operating costs and offer customers an improved shopping trip and better product ranges.

Over the past 3 years, the group has been in recovery mode after falling behind due to high costs, outdated systems and underinvestment in centralised distribution.

Pick n Pay CEO Richard Brasher said the stores were a real step forward:

“When we opened, we didn’t have a big fanfare and trumpets blaring or national advertisements everywhere … what we wanted to do quietly is bring together all the moving parts that are working in our plan, into one store. I must say, after 30 years of retailing and me being fairly grumpy, it’s pretty rare to walk into a store and be impressed. But I am impressed.”

Of the updated stores, its Blue Hills outlet in Midrand is new, while Glen Garry in Cape Town and Benmore in Sandton are refurbishments.

The company has acknowledged that a number of its stores have an old-fashioned facade, while the new-look stores boast wider aisles, better lighting and dedicated product-category alcoves for easy navigation, which will make its offering more relevant to the 21st century consumer.

The product offering has improved as a result of category reviews, product innovation and an expanded private label range.

“This wasn’t just a makeover, where we changed the colour…. There’s the design and the look and feel and then the engine under the bonnet,” Mr Brasher told Business Day.

“So the training and recruitment of the staff, the way we run the checkout, the way we schedule staff — all of that has changed.”

shutterstock_169242065Of course retail is very much a results-driven business and Pick n Pay reported an increase in profits to R322.5 million in the 26 weeks to August 30 from R261.9 million a year earlier, while like-for-like turnover grew 4.4 per cent on last year, an improved performance on a year ago’s 3.6 per cent.

This growth was accomplished in the face of a tough trading market with consumer confidence ebbing.

CEO Richard Brasher said the group had a good first half.

“Despite the challenges, we’re very focused on our business. I don’t allow the team to come in and give me excuses based on the economy, the weather, the wind and the tide — we have to look at our own business and control what we are in charge of.

“Improved underlying fundamentals through a stronger, more stable business, as well as promotional activity such as its 48th birthday campaign, Stikeez figurines and price comparison tool Brand Match were the key drivers of sales growth.

“I always wanted it to be a sales-led (recovery) rather than a cost-cutting exercise and we have delivered strong growth in our profitability, which hasn’t been sacrificed by our increase in sales,” Brasher added.

He also explained that part of the company’s success had come from a strategy to streamline its product range:

“Detailed planograms in key categories are resulting in more effective product display, better on-shelf replenishment and improved product availability,” he said.

At the same time, whilst the new, modern stores were opened during 2015, 4 underperforming stores were closed. Additionally, over 200 new suppliers were brought within Pick n Pay’s centralised supply chain.

Innovative initiatives are also playing their part in the company’s fortunes. In September, Pick n Pay Namibia, a subsidiary of the Ohlthaver and List Group, said it was ready to sell locally grown vegetables and other Namibian products in its stores countrywide in support of the O&L Group’s commitment to “Creating a future, enhancing life” for all Namibians.

Pick n Pay has, in partnership with Natural Value Foods, embarked on a journey in support of government’s “Growth at Home” strategy.

shutterstock_233691496The Otavifontein farm has been part of the O&L Group for many years and has in parts been leased from the group by Pick n Pay, in collaboration with Natural Value Foods Namibia – a joint venture between Pick n Pay Namibia and Natural Value Foods South Africa. Vegetables, such as spinach, cabbage, barley and oats are currently being grown at the farm.

Managing Director of Pick n Pay Namibia, Norbert Wurm, shared his excitement over this venture and believes that, not only will this provide more affordable vegetables to Namibians, but will contribute to healthier living.

“This initiative and agreement with Natural Value Foods Namibia was entered into last year, and serves the purpose of bringing life back to the farm that was laying idle at Otavifontein. We identified that there is a need to grow more products and create more value locally,” Wurm said.

“Entrepreneurially driven Pick n Pay Namibia will share its success in the business arena by facilitating opportunities for others in business; supporting growth in the Micro, Small and Medium Enterprise (MSME) sector, and contribute towards the cultivation of an enterprise culture in our country,” added Forbes.

The Pick n Pay MSME programme was officially introduced at the 2015 Ongwediva Annual Trade Fair, after which a database of potential providers of goods and services was set up.

The challenges facing retailers remain many, but Pick n Pay has found that it is how you react that keeps the business a success.