Pnp Situational Analysis

Ackerman In 1967, he started out with four stores In the western cape and he says It took “10% capital and 90% guts”. The company was listed on the SSE Limited Securities Exchange in 1968 and grew into the leading retail group that it Is today. Pick n Pay currently consists of 795 Hypermarkets, Supermarkets & Family Stores, employs 42 000 people and generates an annual turnover of ROR.

3 billion. Pick n Pay aspires to satisfy customer’s needs by selling quality products at competitive prices and providing courteous service in stores that are well located and pleasing to shop in.

Pick n Pay has been struggling for the last two years, in the last year their profits declined by 39% and they have lost market leadership to Shoplifter. Situational Analysis MACRO Economic Factors Petrol price increase on the 6th of February 2013 was a new record high of ROR. 27 for 95 octane petrol in Sautéing and it was due to higher crude oil prices which contributed to the deterioration of the rand/dollar exchange rate.

Every increase in the fuel price affects the fuel of the transport of retailer’s goods which in turn national/2013/02/10/motorists-must-brace-for- more-price-hikes)

Technology Factors South Africa has been lagging behind in the online grocery retail sector due to low internet access. The introduction of the tablet has resulted in the growth in internet access and online shopping; more than 70% of tablet owners are shopping online. Pick n Pay and Woolworth are currently the most active players in this area and their current challenges are that they do not have the delivery infrastructure, security issues and credit card fraud but they are spending a lot of money to combat these issues and to prepare for the tipping point.

The current barriers for the consumer tit online shopping are as follows: * Consumers don’t trust the system; they want the option of being able to try the process before they have to buy. * Delivery charges, it is never free * No interaction with the product (http://www.

Bedevil. Co. AZ/business/retail/2013/02/18/south-African-retailers-slow-to- tap-online-sales) Social Factors The new upper-income (LSI 8-10)class of the black consumer is living in the urban areas, has a smaller family, is better educated, digitally as’. . Y and earns a very high salary.

They are also brand and quality conscious; they seek out the latest trends hills watching the budget and want a modern & attractive shopping environment. This group is growing by 20% annually and their buying power is increasing fast and reshaping the marketing landscape. Black households are also the largest group in the middle-income class (LSI 5-7) and their numbers continue to grow steadily. (http://www. Instrumentally. Mom/ A_seismic_shift_in_South_African_consumer_landscape_2592) MICRO Consumers Pick n Pays target market is split into three groups which are the premium market (LSI 8-10); main market (LSI 6-7) and the emerging market LSI 4-5).

Pick n Pay has not been able to penetrate the emerging market as yet and this is what they plan to do whilst retaining the main and premium markets. Pick n Pay stores are split into three groups as well, the Hypermarkets, Supermarkets which are corporate owned and Family stores which are the franchise stores.

Shopper Perceptions * Consumers perceive Pick n Pay to be cheaper than Spar and Woolworth who are Pick n Pays key competitors * They don’t have out of stocks of products (Coo’s) as often as their competitors * Pick n Pay is innovative and if there is a new product n the market they are most likely to find it in their stores * Pick n Pay is quality conscious because they always have fresh fruits and vegetables and the store and the shelves are clean. * Pick n Pay is also health conscious because they sell gluten free options and low GIG options leading their consumers to think that they care about their health. Pick n Pay Hyper stores are easy to shop in because they are spacious which limits the chance of trolleys bumping into each other & is a one stop shopping experience. * There is no consistency in the layout of the stores friendly Pick n Pay Hyper does not have a good range of premium or exclusive products but is perceived to be cleaner than Checkers Hyper Competitors Pick n Pay Supermarkets and Family Stores direct competitors are Woolworth, Checkers and Superstar and their indirect competitors are Clicks and Ditches.

Pick n Pay Hype’s direct competitors are Game and Checkers Hyper. Est Model The Est Model was developed to help steer a retailer towards success, it highlights the five key success factors (SF) that they need to own in order to differentiate themselves from the competition. The five pillars of the Est Model are as follows: I. Cheap-est.: Winning with price – This is the company that stands for low prices and Shoplifter is the perfect example of doing this well. They have positioned themselves to consumers as the retailer that offers the lowest prices all the time.

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Big-est.: Winning with a wide range – These stores differentiate themselves from large stores by having the right mix of merchandise of products that consumers want to buy and not Just more products to confuse the customer, it also facilitates bulk shopping. Macro owns this as it is the go to store for bulk shopping for groceries, lotteries and appliances and it also has a very wide range of products. Pick n Pay Hyper is big and has a wide range but they also stock small sizes which portrays that they are trying to meet the needs of the consumer who also shops at the Supermarket versus stocking majority of the bulk sizes.

Ii. Hoot-est.: Winning with Fashion/Latest Trends – This is the retailer who has the latest products at the right time and this is not confined to clothing and fashion but rather the latest trends. Clicks leads in this pillar because the main shopper in the household is usually a male and because she cannot get the full beauty experience at Pick n Pay, Checkers or Spar store she will explore this category at Clicks. The retailer has also partnered with popular beauty brands Sorbet ; The Body Shop and is the only retailer where you will find their products.

They could explore it at Woolworth but they only stock their house brands and a few exclusive brands.

Consumers also choose Clicks because they get cash back when they swipe their Club Card which currently has 3. Million active users. Consumers perceive Pick n Pay to be innovative and to stock he latest products but they do not offer the full beauty experience and range that the consumer desires. Lb. Easy-est.

: Winning with Solution-oriented Service – They differentiate themselves by offering superior service that solves the consumer’s problems and makes the consumers shopping experience hassle-free.

Ditches has personal consultants in store that will answer your questions, they are normally ambassadors for specific brands or consultants that are in store permanently. Spar does not own this pillar but is one of the retailers where you are most likely to experience good service. Their Taft is very friendly, the franchise owners are in the stores majority of the time so this incentives the staff performs better. Spar is a customer that also aligns itself expensive.

Consumers think that Pick n Pay staff is not friendly or helpful and this is holding them back from delivering superior service.

V. Quick-est.: Winning with Fast Service – This retailer capitalizes on the currency of time. Consumers are always in a hurry and are willing to forego low prices, good service or a large variety of products for multiple and convenient locations, easy access parking and efficient & quick Hackett counters. Woolworth have consistent layout for all their stores, offers convenient ready to eat meals and eat in for under ROI promotions for the time strapped consumer.

Their queues are relatively fast in comparison to other retailers and if you feel that you have waited too long in the queue they normally have a sign with the manager’s phone number whom you can call and notify. Their locations are normally within the huge shopping malls or in the smaller community malls that are a stone’s throw from most residential areas of their target consumers and are therefore very convenient. Woolworth is the quality brand, their house brand is perceived by consumers to be the best brand of all the house brands.

In some instances consumers will choose to purchase the Woolworth house brand over a well known brand. However they do not have a wide range of products, so consumers need to top up on certain products at a Pick n Pay, Checkers or Spar store. V’.

Black Hole – The retailer that is trying to be everything to everyone ends up in the black hole which is the integration of all five elements of the Est Model. Pick n Pay falls into this black hole because they are very good at almost all the elements but they have to been able to differentiate themselves using any of the pillars.

We believe that consumers shop at Pick n Pay because it’s clean, convenient, offers quality products and has the range of products that they need. Influential Brand Contact Points at Pick n Pay * Store layout – the lack of consistency frustrates consumers and lengthen their experience in the store unnecessarily * Hygiene – Pick n Pay stores are clean and they offer hand sanitize at the entrance for your hands. * Staff interaction – Interaction with the staff in the aisles, bakery, butchery and at till points defines your entire experience.

Pick n Pay staff varies by store, by gender and by race, there is no * Refunds – Pick n Pay has a policy of refunding goods without consistency question and this has enabled Pick n Pay to establish a long term relationship with their consumers. INTERNAL Company – Pick n Pay Pick n Pay Blueprint I Vision I Our vision is to extend our position as South Africans favorite and most admired grocery retailer I Values I Honesty, Trust, Integrity, Responsibility, Family, Accountability I Mission I We serve with our hearts we create a great place to be. With our minds we create an excellent place to shop.

I Positioning I They listen to you, care about, want the best for you and are inspired by you. I Personality I Confident, Caring, Patriotic, Family-orientated I there for you I Tagging I Inspired by you I Symbol I Pen, it is easy recognizable and easy to remember Mantra I Always Communication: Inspired By You Tagging The tagging does not resonate with consumers and we feel that it is because it is incomplete. Pick n Pays mission, values, initiatives, campaigns and actions all show how much they care about the consumers and want to be their number one grocery retailers.

It is incomplete in order to be able to connect with consumers. They need to let consumers know HOW they inspire them and in that way consumers will be aware of all the wonderful things that Pick n Pay does to ensure that they have an awesome shopping environment and experience. For example: Inspired by you to…

Provide, Inspired by you to… Give back, Inspired by you to…

Eat better. Pick n Pay Communication is mainly targeted at the main shopper in the household, the female.

Their print, TV and radio ads are either sponsorships or promotions of specials. Their website is appealing, exceptionally informative, easy to use and encourages customer feedback. Their Faceable and Twitter pages are very active.

They respond to complaints and queries very quickly and are constantly updating feeds with recipes and events. CSS Pick n Pay supports The Raymond Ackerman Foundation, which is aimed at improving and developing skills to inspire entrepreneurial & community projects and eventually provide employment opportunities.

Pick n Pay also believes that doing good is good business and are committed to supporting South Africans, their businesses and organizations their Goodness campaign. Their CSS projects are aligned to Pick n Pays values, mantra & tagging. Equity Pick n Pay is the 12th most valuable brand in South Africa for 2012 and is worth RE.

3 billion rand. Pick n Pay is a quality brand that strives to be the first choice for consumers by delivering the best combination of quality, price and service.

Smart Shopper There are currently 6 million people that have the smart shopper card and this program has given Pick n Pay a database and information that will help them to get to know their consumers better and also segment them according to their shopper habits. Pick n Pay will be able to do targeted promotions which will be tailor made for hose specific consumers and if there are new products the consumers who would most likely be interested, would get notified. Smart Shopper also offers the Household account where you can link two or more cards to one account and earn points.

If you want to make a difference in people’s lives you can donate your Smart Shopper points to a charity of your choice e.

G. SPA, Pick n Pay School Club, Rape Crisis Trust, Stop Hunger Now etc. Smart Shopper is not a sustainable advantage though because other retailers can introduce one soon so Pick n Pay needs to be innovative and maintain their lead. Partnership with BP Pick n Pay partnered with BP fuel stations last year to convert 120 of their convenience stores to Pick n Pay Express stores over the next five years.

They tested stores will stock between 1 500 ; 2500 fresh ; convenient lines, be open 2417 and cater to convenience for the consumer.

Employees Pick n Pay values honesty, integrity and accountability and recruit employees that are aligned to these values. October 1996 was the time for change for Pen, it was the birth of Fuselage (the rebirth) an initiative to improve human relationships within the company in order to provide better service for our consumers. The first phase of focused on the new mission statement with the employees contribution and phase two focused on the service promise to consumers.

Phase three was called “Fuselage and you” and was designed to give employees a sense of involvement by taking individual responsibility for their actions. The employee interviews also revealed that 40% of employees were illiterate and this resulted in Pen getting accreditation for their internal training modules from the AS Detection and Pen offering education opportunities ranging from ABET to internationally recognized MBA degrees.

Stakeholders – Pick n Pays stakeholders are their consumers, employees, suppliers, shareholders and the South African community.

SOOT ANALYSIS Strengths I Pick n Pay is innovative and if there is a new product on the market you are most likely to find it in their stores I I They are perceived to be cheaper than Spar ; Woolworth and to offer better quality than Checkers I I They don’t have Coo’s as often as their competitors I I Smart Shopper Program gives Pen insight on consumers shopping habits I Weaknesses I They try to be everything to everyone, they do not stand for anything hat differentiates them and are currently in the black hole I I Staff are not helpful or friendly especially to black consumers I I There is no consistency in the layout of the stores (their franchise stores can have different layout)