Pick n Pay leads online shopping

While Shoprite may be Africa’s biggest bricksand-mortar retailer, Pick n Pay is dominating the online shopping sector.

While Shoprite may be Africa’s biggest bricks-and-mortar retailer, Pick n Pay is dominating the online shopping sector.

Following the launch of its Gauteng online shopping warehouse in July, Pick n Pay is now the largest online grocery business on the continent. Pick n Pay introduced its online shopping division in 2001. It was, at the time, the first of a few companies to see potential in this form of retail despite low internet penetration and slow broadband speeds in SA.

In the years following the launch, the company experienced a mixed performance from the business unit. But since 2012, it has been managing double-digit growth annually. In March 2015, the retailer opened its first warehouse dedicated to online in Cape Town.

It has now opened a similar one in Gauteng.

“Online grocery shopping is becoming increasingly popular with our customers,” said Pick n Pay GM for online and mobile Michael Cotterell.

“With the growth of connectivity and mobile devices, online shopping has become an important option for our customers, particularly those looking to have more time available in their day,” he said.

Customers in Cape Town had benefited immensely from the warehouse because it increased product availability and range, offered special online promotions and improved delivery, Cotterell said.

“In Gauteng, we have been supplying from stores but the demand grew to the extent that it justified a dedicated customer warehouse. For our customers, it delivers a better range, increased reliability and more convenience,” he said.

Electus Fund Managers equity analyst Damon Buss said online grocery shopping was an expensive undertaking for retailers in general in SA.

“The issue is that as a retailer, you have all these stores that you pay for. The costs are already invested. The customer comes to get the goods from you. Online shopping, on the other hand, is not getting a retailer money as they now have to pay to get the good to you,” said Buss.

There would need to be a period of transitioning in South African grocery retail concerning cost implications as well as tackling the challenges of delivering fresh food, he said.

“It won’t be a quick transition, especially when it comes to food,” Buss said.

Pick n Pay said those customers who purchased goods online spent on average nearly 10 times more than those who spend in-store. This was mostly because of a large number of regular weekly and monthly shoppers, the retailer said.

The 2016 Nielsen Mobile Shopping, Banking and Payment Survey showed that while many South Africans were connected through mobile, the vast majority were concerned about transacting online.

It said 59% of locals surveyed were concerned about payment security and as many as 65% would make more purchases if there were more incentives, loyalties or rewards offered to mobile shoppers only.