Loyalty card sends Pick n Pay sales up
Business Report - Jun 13th 2011, 08:24
The introduction of its smart card was believed to have helped Pick n Pay achieve “some improvement” in trading during the first three months to the end of May, chief executive Nick Badminton said at the retailer’s annual general meeting (AGM) on Friday.
Badminton said gross margins were improving due to improved buying.
A few months after the high-profile launch of its loyalty card system, the group had signed up 3.1 million “smart shoppers” and the cards were used in more than 50 percent of sales, Badminton said. Its initial target was to sign up 3 million customers in the first year.
Management was starting to see “some rich and very deep information coming out of the card usage”, he said. The information would help management to market to its various groups of customers.
“Our goal is to put the customer first and not to be led by what the supplier wants to market,” Badminton added.
Earlier in the meeting group chairman Gareth Ackerman reminded shareholders of the wide-ranging transformation programme that the group had undertaken to ensure it could deal with a “challenging and very competitive future”.
The programme included heavy investment in management information systems, central distribution facilities, the Smartshopper programme, the Score conversions and “a number of other key capital-intensive undertakings”.
The supermarket group’s disappointing performance in recent years has caused its share price to perform below much of the retail sector.
Despite news of the uptick in first-quarter sales, on Friday shares in Pick n Pay Stores fell 1c to R40.74.
At the AGM Ackerman cautioned against shareholders expecting short-term gains from the transformation.
“We have always predicted that these efforts would affect short- to medium-term results and that the benefits of sweeping change would be measurable across years rather than months,” he said.
“When one considers the scope and speed with which we have instituted essential changes, it is clear that many have underestimated the full extent of the transformation that has been necessary to regain and retain profitable market share and a competitive advantage in a changing competitive environment.”
The note of caution was repeated by Badminton, who said that as the transformation programme continued and the SAP management information system was being implemented, “the next 12 months will be extremely hectic”.
In response to questions from shareholder Michael Florence, he said there had been “occasional system failures” during the initial implementation of the centralised distribution system but stressed, “we are dealing with them”.
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