What you can expect from Pick n Pay in the coming months – including food and grocery delivery
Pick n Pay on Tuesday (18 October) published its financial results for the six months ended 28 August 2022, delivering strong growth in its first trading period under its new Ekuseni strategic plan, launched in May 2022.
Group turnover was up 11.5% year-on-year. Even when normalising for disruptions in the base period – due to the civil unrest, and Covid-19 liquor restrictions last year – group turnover increased by an encouraging 8.2%.
Internal selling price inflation of 7.2% for the period reflects a highly inflationary environment, particularly towards the end of the reporting period, the group said. However, it held selling prices below CPI Food, which rose from 8.6% in June to 11.3% in August.
The group’s gross profit margin increased from 18.2% to 19.4% (R10 billion). However, the gross profit margin in the base period was depressed by the cost and disruption of the July 2021 riots, it said.
Taking this into account, the gross profit margin contracted on a normalised basis by 0.6% pts – reflecting planned investments in lower prices and significant increases in energy costs.
“We are particularly encouraged by the customer response to stores converted to our redefined customer value proposition (CVP) for Pick n Pay and Pick n Pay QualiSave stores,” it said.
In total, 41 stores have been upgraded to the new CVP, with plans to increase this to 130 stores by the end of February. The upgraded stores are achieving average weekly sales growth of 15% compared to a year ago, alongside noticeable improvements in customer advocacy.
The group launched its new Pick n Pay QualiSave brand on 15 August, and so far, 93 stores have been converted to the QualiSave brand.
The group said it is on track to modernise its operations and reduce costs by R3 billion through Project Future.
Pick n Pay Clothing continues to gain market share with 14.8% sales growth, opening 28 new stand-alone stores. Group liquor sales grew 36.2%. 17 new liquor stores were added, taking the total to 646 stores, the group noted.
Clothing operates through an estate of 302 standalone stores, and a presence in selected QualiSave and Pick n Pay supermarkets and hypermarkets.
“In line with the Ekuseni objective to significantly expand the group’s clothing business, Pick n Pay Clothing opened 28 stand-alone stores in H1 FY23, compared with eight openings in H1 FY22 and 27 in the whole of FY22.”
Pick n Pay Clothing currently has 67 new store openings confirmed for FY23.
Online sales grew 82%, primarily through Pick n Pay asap!.
To achieve its Ekuseni goal of building a market-leading online grocery business, Pick n Pay said it has reached a commercial services agreement with the Takealot Group, where in conjunction with Mr D, it launched a Pick n Pay food and grocery on the Mr D app.
“After extensive trials, the delivery service went live from a limited number of stores in early October and is on track to expand to 300 stores nationwide by December 2022,” it said.
“The group is confident that this new offer will drive significant incremental online growth. Pick n Pay brings to the offer its extensive store network, stock-management system, fresh product offering, and in-store picking experience.
“Mr D provides strengths in user-interface design, a 2.5 million active customer base, and a delivery fleet of 15 000 scooters. The Group is confident that the combination will be a highly-popular and scalable customer offer,” it said.
Pick n Pay CEO Pieter Boone said of the new Pick n Pay online grocery offer on Mr D: “It will be the best offer in the market, and we will roll it out nationally by the end of the year.”
“We are opening new Boxer stores rapidly and will accelerate our progress in the coming months. The next six months will also continue to see strong headwinds, including inflationary pressures, rising energy prices, and load shedding,” he said.
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