For the past two years Pick 'n Pay has rolled with the punches as friends and foes alike criticised the company for sleepwalking in a market where drifters are eaten for lunch. The company lost market share as both Woolworths and Spar ate into its upper-income market share, and Shoprite poached its ideas and gloated that it was winning over middle-income shoppers.
Behind the scenes, however, Pick 'n Pay was developing a strategy that would defend its 35% share of the market and take the battle for up-market shoppers to the doorsteps of Woolworths and Spar.
On a superficial level, the company has unveiled a refreshed corporate image that extends from the Pick 'n Pay logo to product packaging, shopping bags and trucks. Out will go the multiple conflicting brand identities (Pick 'n Pay Institute, Pick 'n Pay School of Cooking, Go Banking) and 21 different fonts. In comes a logo that is cleanly designed and contemporary. The company has committed R110m to changing corporate branding over the next two years.
At the same time, a refreshed media strategy - with the emphasis on digital communication - will come into play next week. The company will also launch a new customer magazine, Fresh Living, in an effort to emulate the success of Woolworths' Taste magazine.
However, the changes to the brand are intended to go far beyond the superficial. "Our brand is the key component of an extensive strategy realignment process," says CEO Nick Badminton. The company listened to the feedback of nearly 4 000 customers and has renewed its focus on improving the shopping experience.
"Customers told us our products could be better and fresher," says fresh produce GM Peter Arnold. A team of 42 food technologists and 30 chefs has helped the company launch 450 new and repackaged lines in its "Fresh" range. This includes more than 300 ready-to-eat meals, 80 fresh produce lines and more than 50 new meat products. These will be launched under the Pick 'n Pay brand, replacing the Choice and Foodhall brands.
Some may remember the launch of the Foodhall product range a few years ago. This was Pick 'n Pay's answer to Woolworths' fresh produce challenge - and it seems to have failed.
"This is definitely aimed at Woolworths Foods," says Gryphon Asset Management analyst Abri du Plessis. "It's about stopping the rot." However, Pick 'n Pay's strategy is not a recipe for overnight success, he says. "It takes time to win back people's loyalty. And it could be a gamble. Servicing the upper end of the market may distance the lower end of the market, which is less comfortable in that environment. Or it could entice them."
For Pick 'n Pay there was no choice. "We had reached a tipping point," said chairman Raymond Ackerman in a televised presentation. "The retail landscape is tougher than ever before. We must rise to this challenge."
One of Pick 'n Pay's biggest challenges in this process was bringing the suppliers on board, says Badminton. "But now most of them have employed the necessary resources to get onside with what we are trying to do."
Another group of stakeholders that is on board, says Badminton, is the unions. "We have been talking for 13 months to get buy-in for improving service levels."
Pick 'n Pay employs nearly 50 000 people. "The big work will be in the stores," says Badminton. "For instance, if there is more than one customer in the queue ahead of you, we will open another till until all the tills are open."
With 9,5% market share and a stated intention to grow this to 15% by 2015, Woolworths is never complacent about its competitors. However, CEO Simon Susman's response is: "Bring it on. The food retail scene has always been highly competitive. But we have been able to grow. We've grown on the back of deep-seated values - quality, value and innovation. We see no reason to change that strategy. Customers like our ranges and our convenience. We are hungry and plan to expand our business as fast as we can."
At the same time Woolworths is working to keep its customers in-store by adding to its main line of groceries. "We have just added another 250 strongly price-competitive grocery lines," says Susman.
Badminton promises that this is just the beginning of a series of changes. In support of its ambitions, Pick 'n Pay has aggressively recruited new talent. Steve Hoban, currently director of global procurement at the world's largest retailer, Walmart, will join the company next year for a three-year period. In addition, Malcolm Green and Cobus Barnard, both previously with Woolworths have joined the company as GM supply chain and GM convenience respectively.
The retail game has become a lot more interesting.
Source: Financial Mail
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