Pick n Pay showcases turnaround in modernised stores
Pick n Pay opened three so-called Next Generation stores in its first half, emblems of its turnaround progress and a blueprint for future stores, the retailer said this week.
Advancements achieved across various areas of its business — including logistics, operations and HR — come together in the stores, which have lower operating costs and offer customers an improved shopping trip and better product ranges.
Over the past three years, the group has been in recovery mode after falling behind due to high costs, outdated systems and underinvestment in centralised distribution.
Pick n Pay CEO Richard Brasher said the stores were a real step forward.
"When we opened, we didn’t have a big fanfare and trumpets blaring or national advertisements everywhere … what we wanted to do quietly is bring together all the moving parts that are working in our plan, into one store. I must say, after 30 years of retailing and me being fairly grumpy, it’s pretty rare to walk into a store and be impressed. But I am impressed."
Of the updated stores, its Blue Hills outlet in Midrand is new, while Glen Garry in Cape Town and Benmore in Sandton are refurbishments.
Some Pick n Pay stores are tired and old-fashioned and the more modern stores, which have wider aisles, better lighting and dedicated product-category alcoves for easy navigation, will make its offering more relevant.
The product offering has improved as a result of category reviews, product innovation and an expanded private label range.
"This wasn’t just a makeover, where we changed the colour.... There’s the design and the look and feel and then the engine under the bonnet," Mr Brasher said.
"So the training and recruitment of the staff, the way we run the checkout, the way we schedule staff — all of that has changed."
Profit rose to R322.5m in the 26 weeks to August 30 from R261.9m a year earlier. Tighter operational efficiencies and promotions saw total sales rise 8.5% to R34.9bn and 4.4% on a like-for-like basis, surprising on the upside.
Sasfin Securities senior retail analyst Alec Abraham said the group had been turning the corner for a while.
"All of the pillars of the transformation strategy were perfectly sound and exactly what they needed. They just required time for it to develop and to work, and it’s had some time now.
"What helped significantly is that it seems to have accelerated with Richard Brasher coming in — he is a very strong leader," he said.
The group has made major strides as it steadily moves from a direct-to-store model to centralised supply chain.
Apart from lower costs and improved availability, this enables Pick n Pay to reduce back-up storage areas in stores, creating more space for trade and enabling managers to spend more time on customers and less on back-end administration.