Retailer Pick n Pay has announced plans to take on Shoprite and Woolworths across three main market segments with the launch of “Project Red”.

In a strategy presentation to investors on Tuesday (17 May), Pick n Pay said that its mainline store brand is currently competing in three distinct consumer markets – less affluent, middle market, and more affluent.

Feedback from customers has shown that this strategy has led to inconsistent product offerings, service levels, and store experiences – something which the retailer now wants to change.

In a repositioned market, Pick n Pay will leverage its discount brand, Boxer, to compete in the less affluent market – a segment where it traditionally competes with Shoprite – while the tried and trusted Pick n Pay stores will shift focus to the more affluent market, dominated by Woolworths and more recently, Checkers FreshX stores.

This will leave room for the ‘Pick n Pay: Project Red’ brand to compete in the middle market against stores like Checkers and Spar.

“After almost a year in customer research, with over 7,000 customer interviews, the group will be redefining its relationship with the Pick n Pay customer. Pick n Pay will be organised into two customer-facing brands, each designed around specific customer needs,” it said.

The new customer value proposition is currently in a testing phase, but the core elements include:

• Project Red stores will be organised to deliver low prices and great quality. They will have a range of around 8,000 stock-keeping units, with an emphasis on essentials, a strong fresh offer, and excellent service.
• Pick n Pay stores will offer a depth of range, and an emphasis on quality, innovation and freshness. These stores will have a range of around 18,000 SKUs, giving customers great value, linked to best quality.

Project Red vs Pick n Pay

Pick n Pay’s Project Red aims to cover a wider range of items with a focus on fresh produce and products. It will follow a more low-price strategy, elevating essentials aimed at the middle market.

Product ranges will focus on fruit and vegetables, fresh and frozen meat, cold drinks, and a bakery. The key differential in these stores will be bulk offerings and more floor space given to bulk displays and a strong drive for promotional pricing to remain competitive.

The traditional Pick n Pay branding will move into a more “experiential” type of store, the group said.

The revamped Pick n Pay stores will push fresh offerings, upper-market cheese and wine, with bakeries and more diverse products on shelves.

The group wants these stores to become the go-to for meat and poultry, and provide speciality products, becoming the key ‘aspirational’ brand for the group.

Boxer stores

While there is a renewed focus on the middle and upper markets, Pick n Pay says it’s the lower market that offers some of the greatest opportunities for the group. All market segments are expected to grow by 2026, but it’s the less affluent segment that is anticipated to add the most market value of approximately R140 billion.

Pick n Pay has a market share of 16% – but only 11% within the less affluent segment. This provides a lot of room for potential growth, it said.

To this end, Pick n Pay said it wants to expand its Boxer stores in the country, with plans to add 200 stores over the next three years. The group currently has 380 Boxer stores.

It will also be investing heavily in its supply chain network to support this rollout, while also enhancing its system developments around supply chain planning. The group hopes to double Boxer sales by FY2026, and wants is targeting overall market share growth of 3 percentage points to 19%.