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Introduction
Founded in 1967 as a family controlled business with
4 small stores in the Western Cape, Pick 'n Pay listed on The JSE Limited
(JSE) Securities Exchange the following year, and consequently grew into
a leading retail group. Concentrating on food, clothing and general merchandise,
the Pick 'n Pay Group is managed through 3 divisions; each with their own
management boards. These divisions are the Pick 'n Pay Retail Division;
the Group Enterprises Division; and Franklins Australia. |
•
Group Structure
• Store Numbers
| Store
Name |
2005 |
2006 |
2007 |
2008
(forecast) |
| Pick
n’ Pay Hypermarkets |
|
14 |
16 |
18 |
| Pick
n’ Pay Supermarkets |
|
152 |
159 |
163 |
| Pick
n’ Pay Franchise |
|
179 |
190 |
210 |
| Pick
n’ Pay Clothing |
|
18 |
24 |
29 |
| Pick
n’ Pay Liquor Stores |
|
22 |
36 |
56 |
| Pick
n’ Pay Pharmacies (in Hypermarkets) |
|
6 |
10 |
12 |
| |
|
|
|
|
| Score
Supermarkets |
|
126 |
127 |
127 |
| |
|
|
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|
| Boxer
Supermarkets |
|
54 |
60 |
65 |
| Boxer
Hardware Stores |
|
3 |
6 |
10 |
| |
|
|
|
|
| Franklins
Supermarkets |
|
79 |
76 |
79 |
| Franklins
Franchise |
|
0 |
2 |
10 |
| |
|
|
|
|
| Total
Stores |
|
653 |
706 |
779 |
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•
Group Sales
| Group |
2005 |
2006 |
2007
(forecast) |
2008
(forecast) |
| Turnover
(R million) |
31
885 |
35
078 |
39
337 |
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Market Share South Africa (estimated)
| Chain |
2005 |
2006 |
2007 |
| Pick
n’ Pay |
24.2 |
24.3 |
23.8 |
| Shoprite |
22.9 |
24.2 |
23.8 |
| Spar
(SA) |
15.2 |
15.3 |
14.9 |
| Massmart |
12.1 |
12.0 |
11.8 |
| Metcash |
11 |
11.1 |
10.9 |
| Woolworths |
8 |
8.5 |
9 |
| Sub
Total |
93.4 |
95.4 |
94.2 |
| Other |
6.6 |
4.6 |
5.8 |
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International
Expansion
The
latest full year results reflect a substantial improvement in overall profitability
and general operational efficiencies, following a $10.2 million turnaround
having reduced losses from $19 million to $8.8 million through the stability
and costs effectiveness of its new warehousing and distribution capabilities.
During the year three new corporate stores were opened and a further three
stores are confirmed to be opened in the 2008 financial year. In the same
period five stores were closed, two of which were relocated in existing
shopping centres.
In order to capitalise and build on the current business platform the Board
has committed to a significant capital investment programme in our corporate
stores over the coming years. This additional investment in the Franklins
business confirms the Board’s commitment to growing our business in
Australia.
The Franklins Franchise system was successfully launched during the year
with the conversion of two stores (one being the conversion of a corporate
store). Since conversion both of these franchise stores have shown double
digit sales growth. The roll out of further franchise stores is now a priority
and we are pleased to report that we have recently concluded agreements
for the conversion of a further four stores to the Franklins Franchise system.
This will take the total number of franchise stores to six. We are confident
that these conversions together with others planned for the 2008 financial
year will give momentum to the expansion of the Franklins Franchise system.
Group
Strategy
We
have completed a strategic review of the South African business with the
assistance of Bain Management Consultants. We completed a similar review
in 1994 which resulted in over 10 years of substantial growth.
We have had a chance to absorb the review findings and have put in place
an integrated change plan to set us up for the next 10 years.
A substantial element of the review was in-depth customer research with
2 000 customers across South Africa. Listening to one’s customers
is always an enlightening experience and this was no different. This confirmed
to us that we have strong appeal across all of South Africa. It also highlighted
some important areas where we need to improve.
Our vision is to extend our position as South Africa ’s favourite
and most admired grocery retailer.
This vision is built on five strategic pillars.
Defend and grow leadership in LSM 8-10 heartland Our core market is
the relatively affluent Living Standard Measure (LSM) 8-10 customer. We
must continue to meet and exceed the needs of this demanding customer group.
We are undertaking a range of initiatives the most important of which are:
• In-store delivery – get it right at the front line
• Continuous improvement of ‘Fresh’
• Faster, simpler shopping experiences
• Relentless focus on improving value for money
• Targeted relevant marketing communications
• Elevating our best stores to an even higher level
Bring the best of Pick ’n Pay to LSM 4-7 We have a significant
untapped opportunity to grow in historically disadvantaged areas. We have
heard loud and clear from our customers that they want Pick ’n Pay.
We will be expanding our store footprint rapidly whilst at the same time
ensuring that the Pick ’n Pay experience is every bit as good as it
is in our more ‘upmarket’ stores.
Through
our in-store and local marketing communications we will also be working
hard to improve our price perception. We have the best prices in the country
but can do more to get our message across. We must convince our customers
that they do have it all: great stores, great products, great service and
great prices. “Black Diamonds” ™ is the term TNS Research
Surveys gives to the emerging and emerged black middle and upper class –
an important and highly influential consumer group comprising 2.6 million
customers, spanning all LSM groups. We were particularly pleased to see
that Pick ’n Pay ranked first in 17 of 19 factors that are most important
to Black Diamond consumers. Invest to improve the operating model This includes
two important initiatives: Supply chain and SAP. Our supply chain will evolve
over the next three to four years to the point where more than 60% of our
merchandise is distributed centrally rather than direct to store. This will
help us improve our on-shelf availability, in-store space utilisation, and
achieve cost efficiencies that will enable us to offer even lower prices
to our customers.
As mentioned the SAP roll-out continues and will be complete in the next
12 to 18 months. We are already seeing significant benefits from this project.
Continue to deliver operating efficiencies We have set ourselves a challenging
target for Group operating expenses and will meet this by eliminating unnecessary
waste and through further improvements to our processes. Build world-class
retail capabilities We continue to invest in the development of our own
people and making selective external appointments where we need to bring
in specific areas of expertise. Our organisation will also continue to evolve.
There is a vast amount of activity in the business right now to deliver
against these priorities and we have already made great progress. |
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picknpay_ar2007.pdf
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Group turnover at R39.3 billion showed an increase of 12.1%. This was after a strong second half trading performance, producing a 13.9% increase in turnover.
The trading profit increase of 23.2% has led to an increase in our trading profit margin from 3.0% to 3.3% in the current year.
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pnpSunCityPromotion.doc
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You as a brand owner are invited to participate in a national promotion where pick n pay customers will be able to will a trip to Sun City. You will be guaranteed maximum exposure on pnp instore radio as well as other media. Download this document to find out how you can participate.
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