PnP’s growth plan for Boxer
MARKET SHARE: MOVE TO OPEN 200 STORES
Retailer unveils ‘Project Red’ stores for its customers.
JSE-listed retailer Pick n Pay plans to open 200 new Boxer stores by 2026 as part of its plan to double the discount retail brand’s sales and gain three percent market share. The plan was unveiled by Boxer managing director Marek Masojada this week.
“We have identified the locations we want to be in, and our property teams are hard at work securing premises,” Masojada says.
“We need to maintain our market leading like-for-like sales growth in our existing store base, and our commercial marketing and store operations teams are passionately obsessed with continuous delivery of exciting, innovative and disruptive promotions to drive sales.”
To support this goal, Pick n Pay is expanding its supply chain, announcing that it has opened a distribution centre in the Western Cape and has plans to open another in Gauteng.
Boxer, which already has 380 stores in SA and eSwatini, has been part of the Pick n Pay stable for 20 years and has grown significantly in that time.
A good time to look for property
Sasfin senior equity analyst Alec Abraham says news of the aggressive Boxer expansion initially raised concerns that the retailer might spend too much time pursuing the discounter’s growth, losing sight of its core market.
But Abraham says his concerns eased once it became clear that the retailer still plans to work on improving the customer’s shopping experience at its traditional core brand.
“I initially thought that they are [already] struggling to hold on to market share in their traditional market where Checkers is gaining market share, if they are going to focus so heavily on Boxer – you know, just like we saw with Massmart – they are probably going to land up with a bloody nose and lose focus on their traditional market,” he says.
Abraham notes that despite his reservations, this might be the best time for Pick n Pay to take on this Boxer expansion, given the state of the business environment post-Covid.
“Previously I was very dubious that they would get good sites to aggressively expand, but with the disruption in the property space, I think they are lucky, and they probably have a better opportunity to find nice sites to expand their Boxer [stores].”
New-format Project Red stores
At the same time, Pick n Pay unveiled a new store format in terms of what it calls “Project Red”.
Although it is not yet clear whether the new format will go by a different name, the Project Red format will cater to the needs of the customer floating between the discount Boxer brand and the traditional Pick n Pay brand.
Project Red stores are meant to service the customer looking for competitive pricing and market-beating promotions, with a focus on supplying a wide range of fresh fruit and vegetables, bakery and meat products.
This store format will house 8 000 products – 10 000 fewer than that available at traditional Pick n Pay stores.
However, Abraham is not confident that the retailer will manage to pull this differentiated store format off.
“Lots of companies have tried that – Woolworths has tried that – to curate a somewhat different range of products for a different neighbourhood. I think it’s very difficult and I am not as certain of that, I don’t think that will be particularly successful.”
He nevertheless commended the retailer for reducing its product offering for customers, saying this will help in delivering customer value and will help the retailer to save costs.