Pick N Pay: Defining a business through smart comparison

With consumer purse strings tightened in the past couple of years, the retail landscape has resembled something of a battleground as major supermarkets have jostled for market position. 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.

PNP01“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. Last October the company released half-year results for the 6 months to August 2014, which showed a 6.8 per cent rise in turnover, 35 per cent growth in profit before tax and 35.8 per cent improvement in earnings per share.

At the time, CEO Richard Brasher said that Pick n Pay had delivered substantially better profit performance in a tough market. It had made big gains in efficiency, was forging ahead with its transformation to a centralised delivery system and had improved its stock availability levels.

“Our total turnover reflects lower new space growth in the first half of the year, but we will be opening another 80 stores in the second half of this year,” he stated.

That expansion policy had already seen the opening of 46 new stores during the period, while in December the company opened its ninth store in Zambia after entering the country in 2010.PNP02

The retailer’s ninth 2,000 square metre store was opened in Chingola. It was strategically situated on the copper belt and for mining activities, which provided a great proportion of the town’s employment. Pick n Pay said the store would contribute to employment in the town by providing 116 jobs.

It was reported that in line with its enterprise development philosophy, Pick n Pay will source much of its fresh produce from local suppliers and small-scale farmers, who meet the retailer’s quality and price requirements. Dallas Langman, Pick n Pay’s head of group enterprises, stated: “The Chingola store will carry a wide range of about 6 000 popular lines ranging from fresh produce to non-edible groceries, and will have a liquor department.”

Also during that same financial period, the company made a significant market move when it launched a price comparison tool in August called ‘Brand Match’.

At a time when the domestic consumer is closely monitoring expenditure, the company feels Brand Match will provide the perfect data ally for cost-conscious shoppers, as Brasher confirmed at the time:

“Given the pressure they’re [customers] facing, they are shopping around for the best prices and deals being offered…this can take time and can be confusing. Brand Match offers them the opportunity of not having to shop around, wasting time and money, particularly because in our price comparisons we are including special offers and promotions at our competitors,” he stated.

Under Brand Match, Pick n Pay will compare its prices of 1,000 top-selling branded products with prices in other supermarket chains. The grocer reportedly spent more than 6 months developing Brand Match, working in tandem with research company Nielsen to establish the list of products that local shoppers spend the most on.

The tool works when a Pick n Pay customer buys 10 or more different products, and at least one is listed in the Brand Match 1,000. This triggers an instant price comparison at the till and if the total of their Brand Match products would have cost less elsewhere, the customer will instantly receive a cash-off coupon for the difference, up to a maximum R50, available to spend for their next shop.

“It also helps us as a company. By comparing prices against our competitors every week, and offering our customers money back if and when we are more expensive, we’re putting pressure on ourselves as a team. That’s good because it will encourage us to buy better, manage stock more effectively,” Mr Brasher asserted.

Of course stock control and effective distribution management are other core components to Pick n Pay’s success and the company has invested extensively to make its operations more efficient.

In January it was announced that the company’s Cape Town Airport Distribution Centre (DC) has bought 8 new Crown machines from Goscor Lift Truck Company in an upgrade exercise. The machines include 4 X Crown WT 3020 pallet trucks, 2 X Crown SC 5340 counterbalance trucks and 2 X Crown ESR 5260 reach trucks.

Pick n Pay’s Sedick Hill says he is more than satisfied with the performance of both the machines and the service from Goscor in Cape Town. “We have been working with Crown equipment for some time and when it came time to upgrading some of the older Crown equipment we had no hesitation in continuing with it,” he affirmed.

“Heeding Raymond Ackerman’s advice to be constantly aware of future events, trends and changes, Pick n Pay has always been at the forefront of new developments, particularly in the field of international retailing,” states the company website.

With investment and innovation, combined with excellent customer service and value for money, the company looks set to remain in the leading pack of South African retailers for many years to come.