PnP turns up the heat with prices

MORE ‘NEXT-GEN’ STORES, SMARTER OFFERINGS AND BEATING THE COMPETITION PROMISED The chain is working hard at rolling out better stores as competition from Shoprite and Woolworths continues biting.

Pick n Pay is ramping up its strategy by rolling out more stores and cutting food prices.

Pick n Pay is ramping up its turnaround strategy by rolling out more stores and cutting food prices for hard-pressed consumers as the battle for their wallet share rages on.

“Customers are shopping around for lower prices and the best way to improve Pick n Pay is to run a better shop,” CEO Richard Brasher said.

“We have to be leaner, fitter and stronger.”

Back to basics

Pick n Pay is going back to retail basics of improving the customer experience, revamping stores and investing in price – which arguably it has neglected.

“We are in a good shape and have not run out of ideas,” said Brasher, who was roped in four years ago to turn around the fortunes of the then beleaguered chain. However, the turnaround still has two to three years to go.

Underscoring this is that sales for the year to February 26 2017, grew by a moderate 7% to R77.5 billion. When comparing selling price inflation of 6.1% with likefor-like sales (existing stores) of 3.4%, sales slid by 2.7%.

Part of the catch-up plan includes R1.8-billion capital expenditure into new stores and refurbishments in 2017/18, significantly up from R816 million three years ago.

Since 2015, the retailer has been rolling out convenient and “next generation” Pick n Pay and Boxer stores, modern formats with faster checkout points and a wider offering of fresh food, clothing and personal care.

It opened 150 new stores during the period under review – with 106 being next generation stores while it refurbished 62 stores. And its next financial year won’t be different.

The new-generation store format is enabling Pick n Pay to better use store space, which has also been made possible by its backend investments. It has invested in distribution centres over the past 10 years in the Western Cape, Gauteng and is fi lling a gap in KwaZulu-Natal with a new centre in the region.

Supply chains enable grocery retailers to extend their fresh food offering, manage costs and control stock availability.

Cratos Capital portfolio manager Ron Klipin said Pick n Pay is behind the curve on distribution centre investments, but it making progress in a very competitive market.

“It’s still lacking in terms of fresh, whereas Shoprite has put in a lot of time and money in making fresh available at its stores. The Checkers brand is really starting to get on the Pick n Pay and Woolworths’ turf in terms of fresh and higher margin private label brands,” Klipin added.

To drum up sales, it has also committed more than R500 million in slashing prices of key basket items, including meat, fruits and vegetables.

Over the past two years, it has aggressively launched over 1 700 private label brands. And its loyalty programme Smart Shopper has been relaunched to offer weekly personalised discounts and coupon combinations to its 11 million customers.