#21interviews: PEP plans to open 100 new stores in 2021
by Louise Burgers. Pep CEO Jaap Hamman, says they believe more traditional top end retail customers will be cost cutting and looking for value.Monday, 21 Dec 2020
by Louise Burgers. PEP plans to open 100 new stores in 2021, says Pep CEO Jaap Hamman, as they believe more traditional top end retail customers will be cost cutting and looking for value. This, after Pep recently launched its new upmarket store concept at Canal Walk in Cape Town and a refresh of the Pep brand earlier in 2020. The retailer is clearly going after the now cash-strapped middle market Woolies and former Edgars shoppers, as the economic recession bites, by providing a slicker in store experience.
The Pepkor Group, which includes Pep Stores, Ackermans and Incredible Connection, achieved a 3,6% growth in revenue to R63,7 billion in the 2020 financial year. An exceptional result, considering the R5 billion in sales lost during hard lockdown at the beginning of the COVID-19 pandemic. Pepkor says it was able to navigate the challenges by remaining focussed on their discount and value business models to their large customer base – a customer base that will increase as consumers prioritise value over labels in the near future. Both Ackermans and Pep grew their market share and sales were up by 2,6% for Pep.
Future store focus
Hamman describes the new Canal Walk store as “paving the way for Pep’s future”. The new store is twice the size of an average Pep outlet and will have a completely new layout which will include cellular and home. The design is the result of extensive research into both the latest retail trends and the needs of PEP customers, and it involves a collaboration between three specialist design companies. The store boasts energy efficient LED lighting, and all plastic bags are made from 100% recycled material. The Pep brand refresh, launched in July 2020, features a new modernised logo and will be rolled out to all 2,300 stores over the next few years.
Hamman says the larger, 850 sq m store concept is aimed at providing the customer with a better shopping experience, through bigger entrances, different use of windows, tills moved to the centre, and a better flow throughout the entire store. New merchandise has also been added. “This is a concept. We haven’t launched a flagship store for 18 years. You get most of your learnings once you open. We’ll take it from there and take our time, we are not rolling this store concept out aggressively. Next year we will open another one in the north of South Africa.”
He said they will still be testing extended merchandise ranges in clothing, footwear and home, and how the changes are being received by customers. “Our brand refresh was a new announcement, a new dawn, a new beginning for us. It creates a lot of energy. We need to evolve as a business.”
Hamman believes the reason their sales figures were up despite lockdown and economic hardship, is convenience – there is a Pep store in almost every town; and as a value retailer, they are more popular during tough times. He also cited their culture in store and in the group, which promotes friendliness and togetherness, as in a ‘we grow together’ mindset, as a reason. While there was a fear factor among staff when they were allowed to reopen after hard lockdown, he believes their company culture got them through it. He has noted significant consumer buying shifts into leisurewear and smartphones – as people stay home and need to keep in touch with family or home school.
The challenge of closing its shop doors for the first time in its 55-year history, combined with the changing lockdown regulations, raised the level of uncertainty in the business. And because once they could reopen stores, they could only sell certain lines, the supply chain remained disrupted and warehouses closed. They battled to get stock to Namibia, for example, which did not lockdown. His most important learning during this time is communication.
“The most important thing in a time of crisis is communication, communication, communication. We didn’t know what we would have to deal with on a daily basis. We had a daily communication to all staff and all our stakeholders with what we did know, and what we didn’t know. We had to support Government regulations, and also our staff and customers. We were able to keep on paying our staff and we even paid our staff before lockdown so they could do their shopping. We also paid all our casual workers.
“The second most important thing in a crisis is to explain your plan. Explain to your staff what you are planning to do, how and why. We did not have all the answers, there was no script, this was happening to all of us. But the best was to involve all the team members as much as possible. Be positive and always look for the silver lining and the opportunities. We had to be extremely flexible as we had to keep on changing business rules on how to apply the new regulations. And we had to be visible and engaged, despite the management team working from home.
“Another thing was, we celebrated as many of our small victories along the way to create positive energy. We kept on speaking to our customers, and stayed engaged, listening to what they had to say. Social media was especially important in this regard.”
Hamman says opportunities arose in the retail value chain as a result of the changes happening. “We saw new ways of working using technology. There were many companies closing their doors, so there were opportunities for us to open new stores and employ. Over the last financial year we have opened 83 stores. I saw this period as an opportunity to grow our business, while being conservative with costs. Customer changes were significant. Customers are shopping less frequently, but with bigger baskets. Cash usage is dropping and there is a massive shift to smartphones and a lot more data usage. Home is the new place to stay, but people want home entertainment and to stay connected.”
Keep your promises
As for 2021 and what it may bring, Hamman’s best advice is to stay flexible. “There is still a lot of uncertainty about the future. It will still be a struggle for consumers and retailers. People will look for a bargain. It is important for us to keep our prices low and keep our promises to customers and stay true to who we are. Be ready for everything. Be agile with your planning for a changing market and continue to speak and listen to your customer. We are growing and plan on opening more than 100 stores next year.”
He says a ‘can do’ attitude and a willingness to try new things turn the challenges into opportunities. “The bottom end of the retail sector is getting bigger. There are customers who can’t even afford to buy a blanket any longer; but there are also customers coming from the top end into our market segment and we want them to choose Pep; so it is important to create a good shopping experience. We are gaining more market share. Our purpose is to make a difference in the lives of our customers. We will create hope. We will great you with a friendly smile. We see it happening as that is our vision. That is what we live. We see ourselves gaining more market share.”
For more insights from retail and brand leaders in the #21interviews series publishing 1-21 December 2020, ahead of 2021:
#21interviews LAUNCH: 2021 comes with a disclaimer, by Louise Burgers, Publisher & Editor, RetailingAfrica.com.
#21interviews: Brands need to get brave, says Bozoma Saint John, Global Chief Marketing Officer, Netflix.
#21interviews: The power of being purpose-led will drive brand value, by Karin Du Chenne, Chief Growth Officer Africa and the Middle East, Kantar.
#21interviews: Plan for growth in 2021, says Herman Botha, Group General Manager, PNA Group.
#21interviews: Next year will be all about authentic visual immersion, by Craig Bellingham, Founder & CEO, Studio[K]irmack.
#21interviews: Covid has created a brand vulnerability, says Elouise Brink, Senior Marketing Manager, Country Road, Woolworths Holdings.
#21interviews: Reimagining a better world without the inequality of ‘normal’, with Economist and Author of the post-pandemic book, FutureNEXT, Dr Iraj Abedian, talking to Retailing Africa Publisher & Editor, Louise Burgers.
#21interviews: Embrace technology at all levels, says Thabani Maluleka, Business Development Director for Rogerwilco.
#21interviews: It will not be business as usual, by Dave Nemeth, Trend Forecaster & Founder of at Trend Forward.
#21interviews: Lessons from an unprecedented year in retail, by Jonathan Hurvitz, CEO, Teljoy.
#21interviews: Beware ‘Covid fatigue’, by Guy Yehiav, General Manager, Zebra Analytics, part of Zebra Technologies.
#21interviews: Be deliberate in listening, says Zizwe Vundla, Marketing Director of Diageo South Africa, talking to Retailing Africa Publisher & Editor, Louise Burgers.
#21interviews: Critical factors for retail growth, by Enver Groenewald, Group CEO, Ogilvy South Africa.
#21interviews: The future of micro-commerce in Africa, with Vahid Monadjem, CEO and Founder of Nomanini, talking to Retailing Africa Publisher and Editor, Louise Burgers.
#21interviews: Plan for a ballet of black swans, by Rachel Irvine, Founder & CEO, Irvine Partners.
#21interviews: Consumers are investing to connect, says Shani Naidoo, Group Director, TFG (The Foschini Group).
#21interviews: Data is key to the future of shopping, by Nompumelelo Mokou is the intelligent customer experience executive at Dimension Data.
#21interviews: Direct to consumer is the future for some brands, says Will Battersby, CEO, BOS Brands, talking to Retailing Africa Publisher and Editor, Louise Burgers.
#21interviews: Our products need to make a difference to society, says Natasha Maharaj, Marketing Director, Distell.
#21interviews: Community support will win loyal customers, says Sanjeev Raghubir, Sustainability Manager, Shoprite Group, talking to Retailing Africa Publisher and Editor, Louise Burgers.
#21interviews: The strength of vulnerability, by Wayne Naidoo, Founder & CEO, Duke Group, talking to Retailing Africa Publisher and Editor, Louise Burgers.
Louise Burgers is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.
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