Pick n Pay reports online gains amid social grant pain
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While grocery retailer Pick n Pay's online shopping has seen remarkable growth, the company claims social grant payments are costing it a fortune.
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Yesterday, Pick n Pay published its financial results for the six months ended 26 August, showing its online distribution centres delivered sales growth of 25% year-on-year.
The retailer says its new Web site saw an increase in traffic of almost 70% year-on-year, with a 30% increase in customer registrations.
Pick n Pay's business-to-business (B2B) online sales are up 21% year-on-year. In response to the success of this offer, Pick n Pay says it introduced a dedicated B2B Web site in July, which features a bespoke range of business products, catering uniquely for its business customers.
Pick n Pay's two dedicated online distribution centres deliver small and single pick orders to Express and Spaza stores in Gauteng and Western Cape on a short-order lead time, improving stock availability in its smallest convenience formats, the JSE-listed company says.
Greater personalisation
Michael Cotterell, GM of online and mobile at Pick n Pay, comments: 'Our online customers have told us they want greater personalisation from online shopping and they want to see their favourite or most bought products when they log on.
'Shorter delivery window times for greater convenience are also important, as well as easy access and great functionality to buy groceries online as more customers consider this option. We have listened to our customers and Pick n Pay's new Web site enhancements to offer even more convenience and innovation (including a personalised 'favourites' aisle) has been welcomed by our customers.
'We recorded 25% growth from our dedicated online distribution centres. Pick n Pay's new online Web site saw an increase in traffic of almost 70% year-on-year and online shopper registrations grew by 30%. Our 'Click n Collect' orders have also grown by 60%.'
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According to Cotterell, the retailer will continue to innovate to meet customers' changing needs and habits, and introduce further capabilities to make it easier for them to shop online.
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'To enhance our online offering, we are expanding our range and improving our delivery capabilities. We will also be including more locations for our 'Click n Collect' orders,' he adds.
SASSA pain
Gareth Ackerman, Pick n Pay chairman, at the company's interim results presentation yesterday, said social grants payments are costing retailers a fortune.
'I'd like to take a minute to talk about an issue that affects the most vulnerable in our society: SASSA [South Africa Social Security Agency] payments,' Ackerman said.
'Currently, retailers provide the vast majority of the payout points for social grant beneficiaries. This is essentially a social service, with no requirement that beneficiaries spend in our stores.'
However, he noted, this service to the community has come at an enormous cost to retailers.
'Crime directed at our stores at payout time has become a very serious problem. This issue is being addressed by the Consumer Goods Council with government, and we hope to find a solution soon.'
Meanwhile, the retailer says thanks to developing technology, its rewards programme Pick n Pay Smart Shoppers will soon be able to use their Smart Shopper points directly at the store's till points. This means customers will no longer have to switch their points to cash at the Smart Shopper kiosk or online first, it notes.
'We talk to our Smart Shoppers regularly and always take their views into consideration to make their experience that much better. They told us that being able to redeem points at the till was the one thing they really wanted from the programme to make their shopping trip easier. So from 24 October, they'll be able to do just that,' says John Bradshaw, head of marketing at Pick n Pay.
Pick n Pay cashiers will prompt customers who have accumulated more than R5 if they would like to use their points to pay towards their purchase, although customers can pay with any amount they have on their registered Smart Shopper card.
'This is just another step towards making things easier, simpler and faster for our customers,' says Bradshaw.
Card-less payments
Other enhancements to the programme include the introduction of the card-less swipe functionality. Customers who have forgotten their Smart Shopper card at home, or choose to go card-less, can now scan the QR code from the Pick n Pay mobile app at the till point.
'Innovation is key to Smart Shopper's success, and we're really thrilled with these two new developments,' Bradshaw notes.
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The weekly Just for You personalised discounts, which can now be loaded directly from e-mails, remain popular with customers, says Pick n Pay.
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During the last six months, the programme's seven million Smart Shoppers were offered R2.4 billion in personalised discounts, and redemption of personalised vouchers grew by 15%.