South African retailer Pick ‘n’ Pay has insisted that it is well positioned to expand its sales in the market despite the entry of Wal-Mart Stores into the market.
Earlier this week, Wal-Mart was granted regulatory approval to buy a controlling 51% stake in South African retailer Massmart in a deal valued at US$2.3bn. The news has sparked speculation that Wal-Mart’s entry could result in heightened competition – particularly around price.
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However, Pick ‘n’ Pay remains confident about its prospects. “We are confident about our long-term success in the South African retail market as we move the company strategically to international best practices,” a spokesperson for the group told just-food.
While Wal-Mart is likely to usher in its EDLP strategy at Massmart, the spokesperson said that Pick ‘n’ Pay already works to ensure South African consumers have access to low prices.
“Rising fuel, electricity and labour costs may have incremental effects on product pricing but we have a team of dedicated professional buyers around the country who do everything in their power to negotiate the best possible prices with suppliers,” the spokesperson said.
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Commenting on its planned investment, Wal-Mart said yesterday (1 June) that it intends to drive growth at Massmart’s fresh food business, which it expects to increase by 50% over a five-year period. However, Pick ‘n’ Pay emphasised that it has already taken steps to improve its fresh food and private-label offering.
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By GlobalData“We have vastly improved on our fresh food offering in terms of range, and our private-label brands have been redeveloped and repackaged,” the spokesperson said.
According to the spokesperson, Pick ‘n’ Pay has recently implemented a number of initiatives designed to differentiate it from its rivals, notably the introduction of South Africa’s first loyalty card.
“Our smartshopper loyalty programme is South Africa’s first major grocery chain loyalty programme as part of a business strategy that will enable us to build a stronger relationship with our customers in years to come,” the spokesperson said.
“The programme is aligned to global best practice, such as the highly successful programme operated by Tesco, the UK’s largest grocery chain. Our goal is three million signed up customers in the first calendar year and we are already at 2.7m customers after only two months.”
