Pick n Pay (PIK) - Mind the Gaps
Summary
Our analysis shows that growth in the Pick n Pay owned SA supermarket chain may have stalled in 1H18. Through a series of store visits, we attempt to uncover the key issues hampering a definitive turnaround of PIK. Our research shows that store discipline in some areas may have lapsed, which could have resulted in lost sales.
A review of some customers comments on their Pick n Pay store experience were consistent with our findings.
We believe that in the context of PIK’s cost cuts in recent years, there may have been some impact on the operational performance which is limiting topline growth in Pick n Pay corporate supermarkets. Management would argue that PIK’s cost structure was not optimal previously, and a more efficient structure was required. However, we believe that in the execution of this strategy, there may have been unforeseen consequences which are impacting corporate supermarket performance.
Pick n Pay is an investment holding company. Co. has two operating segments, namely South Africa and Rest of Africa. Co. provides food, non-edible groceries, clothing, liquor and tobacco, health and beauty products, building and hardware and general merchandise. Co.'s offer also includes additional services such as financial transactions at till points (including mobile money), ticketing services and the sale of gift cards. In addition to manufacturer-branded products, Co. has a number of Pick n Pay and Boxer private label products to suit every budget. Co. operates on both an owned and franchise basis. Co.'s stores range from hypermarkets to small convenience stores.
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