PicknPay revival

Is Pick n Pay on path to regaining its former glory?

Whisper it softly, but it seems that this time, Pick n Pay’s “turnaround” strategy might actually be working.

Richard Brasher, the soft-spoken Englishman recruited shortly after he left UK retail giant Tesco after clashing with the top brass over strategy , seems to have had much more luck in muscling Pick n Pay back onto the right path.

Despite the company’s storied history, success wasn’t inevitable. Not many held out much hope when, in 2013, Brasher was hired to lead a “turnaround” — yet another in a seemingly never-ending cycle of revival plans going all the way back to Nelson Mandela’s presidency.

At the time, Brasher — a dyed-in-the-wool retailer with 26 years at Tesco — said: “We need to give people more reasons to shop with us.” On recent evidence, it appears he has done just that.

Its market share, bleeding for years, has at least now been bandaged. Paypoints work faster; there’s a better choice for customers on the shop floor. And this has translated into its bank accounts.

Last month, Pick n Pay’s full-year results showed its profits had soared 22.3% to top R1bn, while its trading profit margin, a key figure for retailers, had improved to 2.1% from 1.9%. It’s still some way lower than Shoprite’s 5.3%, but hey, it’s progress.

Investors, who had abandoned Pick n Pay for Whitey Basson’s more dynamic Shoprite or the aspiring multinational Woolworths, have begun to trickle back.

Pick n Pay’s share price is up 28% over the past year — outpacing Shoprite (up 4% over that time), Spar (up 10%) and Woolworths (down 8%).

This has revived talk of its glory years when, under Raymond Ackerman, Pick n Pay first wrenched market share away from the likes of Checkers and OK Bazaars.

Richard BrasherBut here’s the $64bn question: is Brasher’s (pictured left) turnaround for keeps? In other words, can Pick n Pay be truly great again?

It wouldn’t be the first “great” company to have fallen prey to more nimble rivals. US department chain Macy’s, once the poster child for retail, has fallen on such hard times that it lost 60% of its share price over the past decade.

It’s not alone: department stores such as Kohl’s, Dillard’s and Nordstrom posted the worst comparable sales declines since the 2008 recession.

In SA, OK Bazaars was once the leading retailer but failed so spectacularly that it was ultimately bought for R1 by Shoprite.

“Of course it [Pick n Pay] can be great again,” says independent analyst Syd Vianello. “It’s a phenomenal brand. It’s not a brand in terminal decline where the product has become irrelevant: to take a video shop and make it great again because the industry is in near-terminal decline is impossible. But the supermarket industry is not in decline.”

In an interview with the Financial Mail, Brasher is characteristically reluctant to declare victory just yet.

“I’m not claiming some landslide victory here, I’m just saying the market is more competitive and we’re competing in it,” he says. “We are getting our share of the market. We are growing roughly in line with the market so we must be getting our share.”

That’s hard to say, since getting apples-for-apples market-share figures for the retailers is notoriously difficult.

For example, Euromonitor puts Shoprite’s market share at 19.4% and Pick n Pay’s at 14.1%. But Nielsen puts Shoprite’s share of the formal food market at 31.2%.

But under Brasher, there is certainly new energy. In the past financial year, 175 new stores were opened under its two core brands — Pick n Pay and Boxer — increasing total space by 4.5%.

Of course, it’s one thing to talk of numbers, quite another to see real change on the store floor where, ultimately, Pick n Pay’s success will be judged.

And the new stores reflect this new energy. At Benmore Gardens, a stone’s throw from Africa’s richest mile in Sandton, the refurbished store feels more spacious than ever. Floor tiles are bigger, aisles are wider and the ceilings are higher. The bakery, deli and butchery are all clearly demarcated. There’s even a sushi bar. It’s Pick n Pay — just not like you know it…..

Financial Mail: Read the full article