The Pick n Pay Group

Pick n Pay is a food, grocery and general erchandise retailer selling a wide range of products at great prices in shops where our customers are welcomed and treated with respect. We serve customers from across the range of society. As well as offering a wide range of branded products, we also have private labels to suit every budget.

The Pick n Pay Group, through its South Africa and Africa divisions, with its Pick n Pay and Boxer brands, is a food, grocery and general merchandise retailer selling a wide range of products at great prices, in shops where our customers are welcomed and treated with respect.

We serve customers across the diverse spectrum of South African society, and are expanding our reach into the African continent. As well as offering a wide range of branded products, we have Pick n Pay branded products to suit every budget: through our Finest brand, our core Pick n Pay brand and our budget No Name brand. More than half of all South Africans shop regularly in our stores and we have among the most loyal customers in the country.

We are developing as a multi-format, multi-channel business. Our stores range from large hypermarkets where customers can buy everything under one roof, through to small convenience stores where customers can shop quickly for their immediate needs. Franchise is a core part of our business model, and we are also developing convenience and other smaller store formats. Our franchisees are strong representatives of the Pick n Pay brand and we are privileged to have such committed and capable retailers serving our customers.

We have a small and growing online business, giving customers the opportunity to shop from their homes and have their products delivered to their door in one-hour time slots.

We are an international business. The rapid emergence of a consumer economy across Africa gives us the opportunity to grow into new markets. This has the potential to be a second engine of growth for the Group, bringing safe and affordable food to many new customers and communities. In recent years we have expanded beyond the boundaries of South Africa into the adjacent markets of Namibia, Botswana, Lesotho, Swaziland, Zimbabwe, and Zambia. In total we have close to 100 international stores generating sales of over R3 billion per annum and contributing meaningfully to our profits. We tailor our ownership model to what is appropriate to the local environment, whether establishing owned stores, franchised stores or a part-investment in an independent operation. During the year we closed underperforming franchise operations in Mauritius and Mozambique to enable us to focus our attention on markets with more potential.

We know that at the heart of great customer service is a great team. We employ almost 50 000 people in our owned stores and with franchise, this extends to close to 73 000 people working under the Pick n Pay and Boxer banners. Working at Pick n Pay is more than a job. It is an opportunity to learn, develop new skills and benefit through great teamwork. We are committed to training and empowering our people, and our aim is to be the employer of choice in the retail industry.

Consumer trends

Since 1994 the South African economy has grown rapidly. This growth has seen increased disposable income across society and led to a rapid growth in the consumer economy. Living standards have, on average, improved and our customers are constantly aspiring to improve their living conditions. As the economy has grown the government has increased social security payments helping to raise the conditions of the least well-off.

However, the benefits have not reached everyone equally. There remains much to do for us as a nation. Unemployment remains stubbornly high at over 25% for the quarter ending March 2014, with youth unemployment higher at 53%. The divergence in living standards between those with the most and those with the least is stark. Basic standards of housing, education and health remain below acceptable levels. Additionally, consumers in South Africa have come under increasing financial pressure over the past year. Living costs have risen significantly, particularly utility and fuel costs. Interest rates have also begun to rise, adding pressure to those customers who are purchasing their homes on credit or who rely on credit to fund their lifestyles. The value of the rand has fallen significantly, relative to other international currencies, putting pressure on the cost of imports and driving prices higher.

Our prices have risen substantially less sharply than CPI. However, we recognise that many of our customers are under substantial pressure to tighten their belts. They will therefore reward those retailers who provide the most compelling offer in terms of price, quality and value.

Customers in South Africa and more widely are also increasingly placing a premium on convenience. For those in work, time is an increasingly scarce commodity. Customers are seeking out those retailers who provide convenience either in the form of smaller, more local stores, or increasingly in the form of an effective online offer. Our store expansion programme recognises this trend and we are focused on opening smaller convenience stores in markets not yet widely serviced by the Group.