SOUTH AFRICA – The second largest supermarket chain store in South Africa Pick n Pay, is planning to tap into growth opportunities in the rest of Africa over the long term as it announced a 4.3 percent increase in group turnover to US$6.5 billion during the 12 months ended in February 2021 compared to a similar period a year ago.

Presenting his final financial results presentation after 8 years at the helm, outgoing Pick n Pay chief executive Richard Brasher said that the group was planning in a measured way to explore the opportunities in Africa.

“I know some people are nervous about Africa,” Brasher said.

“Africa is forever. We do feel we are well positioned in both our format and brands to have growth in all segments in the South African and the international markets.”

Pick n Pay, whose rest-of-Africa business includes Zambia and Zimbabwe, said turnover over the division increased 4.6 percent, excluding currency weakness.

Head of strategy and corporate affairs David North said the group had not expanded quickly into the rest of Africa and did not need to retreat like other retailers.

“We believe the lesson learnt from other retailers is that if you are going to expand it will have to be on a lean and low cost model, which will cater to the majority of customers with a good value offer,” North said.

Last month rival Massmart announced it was reviewing its footprint outside the Southern African Development Community, and Shoprite said it would exit its Nigerian supermarket chain after 15 years of operating in that country. Truworths, Mr Price and Woolworths have also exited Nigeria due to tough regulations over the past decade.

Pick n Pay said its earnings had been affected by trading restrictions due store closures, bonus payments paid to employees due the Covid-19 pandemic, and two retrenchment processes comprising a voluntary programme and a reduction in headcount.

Incoming chief executive Pieter Boone said among his goals was to make Pick n Pay the first choice of its customers, accelerate the Boxer business as well as building on the group’s omnichannel strategy.

“The lesson learnt from other retailers is that if you are going to expand it will have to be on a lean and low cost model, which will cater to the majority of customers with a good value offer”

David North – Head of Strategy, Pick n Pay

“The past year has shown clearly that the retailer of the future must be an omnichannel business, strong in the digital world as much as it is in its physical footprint,” Boone said.

Pick n Pay, which owns Boxer – one of South Africa’s fastest growing discounter – recorded US$281 million in lost sales as the government closed the taps on trading in liquor, and tobacco to curb the spread of Covid-19, while it incurred US$14 million in additional costs as it responded to the pandemic.

The group lost 209 liquor trading days over the year under review, including 126 days in the first half and 83 days in the second, with reduced trading hours for all but three weeks of the financial year.

Despite the lost sales, Pick n Pay recorded a 10 percent sales growth in core food and groceries in South Africa.

The Johannesburg Stock Exchange listed supermarket chain said it had 1,994 stores after opening 112 new stores across all Pick n Pay and Boxer formats.

Consultant at Euromonitor, Christele Chokossa, said Pick n Pay’s performance consolidated Brasher’s legacy, because during his tenure, he managed to turn the company into a viable business model, which he maintained during a pandemic.

Chokossa said the group’s expansion strategy seemed to focus on smaller formats and value offerings, hence acquiring Cambridge and Rhino stores could allow it to achieve this goal while improving its competitiveness against Shoprite Holding at the lower end of the market.

“Looking at the results; the surprise came from clothing, especially when considering that Pick n Pay is a relatively new player in the sector and yet, managed to outperform the market,” Chokossa said.

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