Pick n Pay: Not still picking up scraps from the Shoprite floor
A weak Shoprite is still proportionally more profitable than a strong Pick n Pay. CEO Brasher is trying to fix it
For the better part of a decade Pick n Pay played second fiddle to Shoprite and Spar. This year it caught up, producing strong results for the year to end-March in a difficult economy. The turnaround was sparked by former Tesco CEO Richard Brasher taking charge in 2013.
Brasher introduced major changes such as improving the efficiencies of its supply chain. Under him the Pick n Pay loyalty programme, Smart Shopper, has begun to work. The retailer has also cut its overheads – in the 2017 financial year, for instance, it reduced its head count by 3,000 people by offering staff severance packages.
The group has done well to get a better performance out of its operations, but it still has a long way to go catch up with its major rival. Shoprite has had a horrid 18 months but with a trading profit margin of 4.4% it is streets ahead of Pick n Pay’s margin of about 2.1%. This means a weak Shoprite is still proportionally more profitable than a strong Pick n Pay.
Brasher knows this. Which is why he is still looking to reduce costs and grow the number of Pick n Pay stores. Even so, the group’s rivals should know they are in for a fight as the days of them stealing away its customers are over.