Big changes at Pick n Pay – and it’s already seeing results
Retail group Pick n Pay says that it has successfully converted six of its stores to the new ‘Project Red’ format, with plans to accelerate the rollout over the next year.
In a strategy presentation to investors in May, Pick n Pay announced that it would be splitting its operations into three distinct brands to operate across different market segments – less affluent, middle market, and more affluent.
Under the ‘Ekuseni customer value proposition (CVP)’, the standard Pick n Pay brand will be shifted to the more affluent market, while the group’s Boxer stores will keep its position in the less affluent market.
The new brand, codenamed “Project Red”, would be launched to compete in the middle market, it said.
And in an operational update for the 52 weeks to 3 July 2022, the retailer said it has already upgraded six stores to the new Project Red format, noting that it has seen “exceptionally encouraging initial results”.
“Weekly sales of the initial five pilot CVP stores – whose longer sales history provides a more accurate underlying read – grew by 18% on average since launch. This excludes the first 3 weeks of trading post the upgrades, where sales growth was considerably higher but supported by re-launch promotional activity,” it said.
“Weekly sales of the initial five pilot CVP stores – whose longer sales history provides a more accurate underlying read – grew by 18% on average since launch. This excludes the first 3 weeks of trading post the upgrades, where sales growth was considerably higher but supported by re-launch promotional activity,” it said.
The group said that sales growth at these stores was driven by increases in both traffic and basket size, and growth in the identified ‘power categories’ of each format has been particularly pleasing.
“The Net Promoter Score (NPS) of the upgraded stores has improved by more than 25% on average in the 6 weeks since launch. Ekuseni is targeting 20% growth in the NPS score across Pick n Pay company-owned supermarkets over the term of the plan,” it said.
The group said that the initial upgrades showed that strong results are achievable with limited capital expenditure per store given the right format and execution.
“This has given us the confidence to accelerate the plan,” it said.
New format
Project Red stores aim to deliver low prices and great quality, according to the group’s May presentation. They will have a range of around 8,000 stock-keeping units, with an emphasis on essentials, a strong fresh offer, and excellent service.
The new store brand aims to cover a wider range of items with a focus on fresh produce and products, following 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.
- For its fruit and veg market, it aims to provide a ‘fresh market feeling’ with a relevant range, an increased focus on quality and bulk savings.
- For its fresh and frozen meat section, the group aims to offer a complete protein solution while offering bulk to improve ‘price perception’. It will also provide special training for employees to improve service.
- For cold drinks, the group said it will Increase space on perimeters, focus on CSD promotions, and extend the offering of carbonated soft drinks around flavours.
- For the bakery under the project red label, it will have more space and new counters to create a dedicated bakery world, among other things.
Pick n Pay said Tuesday that it aims to have 40 stores upgraded to the new formats by the end of H1FY23, and to have 150 stores upgraded by February 2023.
Other goals in the Ekuseni CVP are also progressing well, the group said.
- Pick n Pay Clothing has 73 new store openings confirmed for FY23 (vs. 27 in the whole of FY22).
- Boxer is on track for 61 FY23 new store openings (vs. 36 in FY22).
- Boxer continues to grow ahead of the market and is progressing well on its plan to double sales by the end of FY26.
- Progress towards our goal of a step-change increase in online sales continues.
- The launch of a dedicated Pick n Pay food and grocery offer on the Mr D App is on track. The initial launch will be in a limited number of stores in August, with national coverage targeted by the end of FY23.
Read: Pick n Pay to launch new store brand to take on Checkers and Woolworths
