Keeping the tills ringing

The food retail sector can get more than a little Darwinian when disposable income is under a squeeze and the nation’s shoppers are on the hunt for a bargain. The trolley pushers are ruthless proponents of the theory of natural selection when it comes to shaving a few cents off the price of their can of pilchards, and any operator that is not on top of its game will soon find itself on the wrong end of the survival of the fittest.

Fortunately for its stakeholders, Pick n Pay’s results show that the retail giant is bursting with health, posting numbers that would be creditable in times of plenty and are remarkable under the current economic conditions. There’s nothing revolutionary about its long-term business plan, which focuses on building a lean and cost-effective business offering customers value, quality and innovation, but while this may be a simple enough strategy to articulate, it is another thing altogether to execute and continue to do so at this level.

Key to the company’s success is a relentless focus on price, monitoring 2,500 prices across the sector each week to make sure that it remains competitive. It has shaved costs by centralising its supply chain, while its Buy Better programme has deepened its relationship with its suppliers, allowing for greater efficiency and squeezing out R500m of value in the year. Its Smart Shopper loyalty scheme reaches more than 7-million active customers each week, offering discounts of about R6.6bn on items that are relevant to the customer, and this is key to its success in keeping the tills ringing.

Key to its success is a relentless focus on price, monitoring 2,500 items each week