Pick n Pay’s big blunder which was ‘absolutely nuts’

Pick ‘n Pay CEO Sean Summers said converting traditional Pick n Pay stores to QualiSave outlets was a blunder which was “absolutely nuts”.

Converting Pick n Pay stores to QualiSave outlets formed part of the retailer’s extensive Ekuseni strategy, unveiled in 2022.

Ekuseni was sold to stakeholders as Pick n Pay’s “New Dawn”. Former CEO Pieter Boone described it as the “biggest and most important change in Pick n Pay for many years”.

Boone said the strategy was created after they had “developed a very rich understanding of the business”, including its strengths and weaknesses.

It included a new customer value proposition, growing Boxer, achieving omnichannel and digital leadership, modernisation, and building a high-performance team.

As part of the new customer value proposition, Pick n Pay was organised into two customer-facing brands.

• Pick n Pay QualiSave stores to serve the lower- to middle-income segment of the market.
• Pick n Pay stores to serve the middle- to higher-income segment of the market.

Pick n Pay QualiSave stores had around 8,000 products, focussing on essentials, a strong fresh offer, and good customer service.

In comparison, Pick n Pay stores would offer a range of around 18,000 products and cater to customer aspirations, including through a fully integrated omnichannel offer.

“These two Pick n Pay brands, together with Boxer, will cover the market, meet specific customer needs, and appeal to the entire South African customer demographic,” it said.

In August 2022, Pick n Pay QualiSave was launched. The retailer planned to convert 40% of Pick n Pay company-owned supermarkets to Pick n Pay QualiSave.

The Pick n Pay QualiSave had a new store layout, distinctive in-store signage, and product selection specifically aimed at the growing middle-market shopper base.

“Alongside Boxer, our two Pick n Pay brands now perfectly enable us to deliver the right products, at the right prices, to the right customers,” Boone said.

“We are hugely excited by the positive customer response to the Pick n Pay QualiSave pilot stores. Our sales have increased, and customers are shopping more often with us.”

The table below, where the Pick n Pay QualiSave segment is described as ‘Project Red’, gives an overview of the planned new customer value proposition under the Ekuseni strategy.

However, while Pick n Pay told investors in 2022 that Pick n Pay QualiSave was a hit, Summers revealed it was an unmitigated disaster.

He told Biznews Pick n Pay always had a presence in lower-income areas and that the QualiSave project made them take their eye off the ball.

“Unfortunately, the focus was taken off the Pick n Pay stores. We had this really, really poor thought about QualiSave being able to compete in those marketplaces,” he said.

“People were highly offended, and I don’t blame them. The markets and those population groups absolutely want their Pick n Pay.”

He gave the example of Sam Ntuli Mall in Katlehong, which had a Pick n Pay QualiSave store on one end, a Boxer in the middle, and a Shoprite on the other end.

“The Pick n Pay QualiSave store is trying to sell exactly the same products as what the Boxer is selling. It is nuts, just absolutely nuts,” he said.

He said Pick n Pay’s Ekuseni and Qualisave plans were an example of a poor strategy which was well executed.

After Summers took the reins from Boone, the retailer started converting Qualisave stores back to Pick n Pay stores and rebranding others to Boxer stores.

Summers said the current situation with two retail brands – Pick n Pay and Boxer – is far more sustainable and logical.

He said the stores serve different needs and can thrive alongside each other in shopping malls and across South Africa.

What Pick n Pay QualiSave stores looked like