Tag: pick n pay

South African consumers have hit hard times over the past few years as a creeping GDP growth, high unemployment and many political shocks continued to weigh on the economy.

In June, GDP data from Stats SA showed that South Africa has officially entered into a recession, with economists predicting tough times ahead for consumers, as more ratings downgrades are in the pipeline, which will ultimately put further pressure on the pocket.

One of the key components of South Africa’s slide into recession was a cut in consumer spending, in everything from recreation, clothing and transport, to even basic needs categories like food.

And South Africa’s biggest food retailers are feeling the pinch.

In April, Pick n Pay missed expectations for its full year earnings citing strained consumer spending as shoppers sought out cheaper options – which appeared to drive them to Shoprite’s doors, who reported a 14% growth in turnover in its latest financial year.

Woolworths, which has consistently positioned itself as a ‘premium’ food store, has seemed to weather the storm, with its latest results for FY2016 showing a 24% growth in profit from its food segment – which makes up 37% of the group’s total turnover.

A weakening economy and drought conditions hit South African food prices hard in 2016, with food inflation hitting close to 12% throughout the year. With a record yield from crops expected in 2017, some relief is on the cards – but the recession and other expected economic woes are likely to keep the pressure on consumers.

In the latest assessment of prices across South African retailers, we found that there has not been much a shift among South Africa’s food retailers.

When shopping for the BusinessTech basket of goods, Woolworths still checks out at the highest price – though it is apparent that, with the exception of Shoprite, competitors have struggled to keep prices low.

The BusinessTech Basket of Goods

For our basket, we look at some essential and non-essential food products. The basket contains 12 items, with store-brands priced for each item where available. The table below shows the pricing:


Prices were sourced in-store from stores around Centurion and cross-checked online, where applicable.Promotional prices, where marked, were not taken into account. Woolworths self-raising flour prices were determined on a per kg basis. In-store prices are subject to change depending on individual regions and promotions.

Prices have increased significantly in some cases, compared to the mid-2015 review. This is most notable in sugar and maize, which were impacted by drought conditions in the country during the interim period.

The most striking difference between the 2015 and 2017 reviews is that Pick n Pay, which was ranked as the cheapest basket in 2015, is now extremely close to being the second-most expensive, a few rands under Spar.

Checkers, which has positioned itself as the more affordable option, has lived up to that reputation, with many of its prices actually decreasing between 2015 and 2017.

Source: www.supermarket.co.za

Pick n Pay slashes Smart Shopper rewards

Pick n Pay has overhauled its Smart Shopper loyalty programme, halving the value of the cash rewards but saying it is making the rewards more personal and easier to access.

Early indications on social media are that the changes to the most popular customer loyalty programme in the country have not been well received.

Smart Shopper, which was launched amid much fanfare in 2011 and which was considered to be one of the more generous retail loyalty programmes, played a critical role in Pick n Pay’s turnaround by helping to lift top-line performance almost immediately. But it was less helpful to the bottom line.

From the start, management dismissed suggestions the programme was too generous to be affordable on a sustainable basis.

Sasfin Securities’ analyst Alec Abraham questioned the perception that the programme was overly generous. From the company’s perspective it not only drew in more customers, but provided critical stock-management information, he said. “The number of members was well above what management expected, but the rewards was a small price to pay for all the information the programme generated,” he said. The information was particularly important to Pick n Pay as it was in the process of switching to centralised distribution.

The overhaul — implemented last week with no fanfare — comes just weeks after the company said it was making R500m in price cuts on 1,300 items. Analysts say retailers are caught between offering discounts in tough economic conditions and protecting margins.

David North, group GM of strategy and corporate affairs, said on Monday that the group’s recent initiatives demonstrated the group’s commitment to giving customers more value.” When looking at the changes to Smart Shopper, customers can be assured that every rand and more is being given back to them through lower prices and more and better discounts.”

From March 30, Smart Shoppers need to spend R200 to get back R1. The previous rate was R1 back for every R100 spent, cutting the cash-back rate to 0.5% from 1%.

Management said a key feature of the overhaul would be weekly personalised discounts tailored specifically to individual Smart Shopper based on shopping habits. “With the new Smart Shopper, Pick n Pay will be offering 30-million personal discounts every week or three discounts per customer every Thursday for 10-million customers,” the company said.

The aim is to give customers more than R500 in personal discounts over the year.

Smart Shopper points already awarded are unaffected.

While shoppers are likely to be unconvinced by the touted benefits, investors appear happier. After closing weaker on Thursday and Friday, in line with the market, the share price closed firmer on Monday.

By Ann Crotty for www.businesslive.co.za

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My Office News Ⓒ 2017 - Designed by A Collective


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