Eugene Stoop, MD
Boxer Stores Ltd

KwaZulu Cash & Carry was established in April 1977, in the centre of Empangeni, KwaZulu-Natal, South Africa. The company commenced operations as a conventional wholesaler, trading in the essential commodities, such as maize meal, rice, samp, sugar, oil and beans. Read more...

Pick n Pay picks itself up in strong showing

Pick n Pay picks itself up in strong showing By Ntando Thukwana.

Pick n Pay has rolled out new stores and refurbished existing ones. Picture Waldo Swiegers Getty Images For several years, Pick n Pay, one of Africa's biggest grocers, struggled to emerge from the doldrums, with competitors well ahead in the food retail race.
But this week a trading update from the retailer shows an improved performance. Bjorn Samuels, an analyst at Argon Asset Management, said the trading statement highlighted a strong performance by Pick n Pay that outdid its listed peers. "It's safe to say that they have gained market share. The reason for the out performance is due to both internal and external factors, in our opinion. We view the Shoprite group as Pick n Pay's biggest competitor and think that the negative impacts of the SAP implementation and distribution centre strikes at Shoprite allowed Pick n Pay to steal some market share from the Shoprite group," Samuels said. 

Shoprite has been the market leader in central distribution, but Pick n Pay's hefty investment in 
 its own central distribution network is now paying off. More efficient delivery to its store net work had helped Pick n Pay grow its private label "No Name" product offering, said Charles Allen, global food retail research analyst for Bloomberg Intelligence. Pick n Pay has about 1,732 stores in Southern Africa, including Boxer stores and TM Supermarkets in Zimbabwe. The investment in private label products had allowed the retailer to develop a broader assortment of products, Allen said. "The more suppliers that you can access in that way means that you can develop more interesting products and you can be more innovative."

Pick n Pay's turnaround has also involved the shedding of more than 3,000 jobs. In the 52 weeks to February 28 2018, the voluntary severance programme resulted in a one off cost of R250m. "The full benefit of the voluntary severance programme will be realised in 2019," said Samuels. "We believe the higher sales growth and this programme have provided the bulk of the earnings per share growth range provided in the trading statement." The retailer has also focused on aggressive pricing. "Essentially, they made prices more competitive, which in turn attracted more consumers or at least ensured that consumers spend a higher percentage in a Pick n Pay store rather than choosing to go elsewhere for some things," said Allen. 

Shoprite's troubles included a strike at its Centurion distribution centre that left its stores insufficiently stocked. Upgrades of its IT software also caused supply issues. "I think over a number of years people must have given up to a certain extent on Pick n Pay and chosen to go to Shoprite or one of the other retailers ," said Allen. "And if they go back into Pick n Pay and they find it more acceptable in terms of price and assortment, then you just shift a little bit of your spending back.

Pick n Pay's recovery is one that Allen describes as "a good performance with good volume growth in a market where there's deflation. I think it's just essentially been whole series of retailing basics that have gradually improved the sales moment over time," he said. Part of its plans was to roll out new store and refurbish existing ones to make their brighter with a more modern feel. Allen said there was still scope for Pick n Pay to expand its Boxer brand as it resonate with "a large group of consumers short money on an everyday basis". The retailer said that for the 53 week ended March 3 turnover would rise 9.69 while earnings per share were up between 20% and 30%. Pick n Pay's share price game 5.5% after the release of the trading update. Despite posting positive growth, Pick n Pay said it endured challenges in markel outside SA, specifically currency uncertainty in Zimbabwe where it has a 49% stake in Ti Supermarkets. 

Publication: Sunday Times (Western Cape)
Date: Sunday,April 14,2019