The consumer is queen — so watch what she is doing and believing
Pick n Pay, a leading south African chain of supermarkets and convenience stores, understands its customers. Most interestingly, the company understands that even individual shoppers are still not one consistent shopper — as Pick n Pay Chairman Gareth Ackerman puts it, sometimes “she visits as a mother doing her monthly shop, another time for a special treat for her family, or running in for milk. The same amount of money, the same credit card, but a different mindset.” By studying behaviors in the aggregate, and measuring patterns with sophisticated electronic monitoring, Pick n Pay is able to determine the best SKUs to have, the best store formats and the best brands to offer.
The company recognizes the benefit of understanding the values of its customer base. Growth in the Millennial generation, for example, means Pick n Pay must ensure it’s responding to these consumers’ “strong beliefs in principles,” which means the company needs to focus on being a good employer and giving back to its communities. “Doing good is good business” says Mr. Ackerman, and Pick n Pay backs this credence each year by contributing 5 percent of its annual profits to corporate citizenship initiatives.
In living up to their corporate values, Pick n Pay strives to build consumer trust, and for the communities they serve to hold their brand in high regard. This is key in the day and age of social media. As Mr. Ackerman puts it, “You have to be very careful as to how you manage the total stakeholder relationship. Make sure you look after your communities, because if something goes wrong, you need to be able to limit the downside.”
At the same time, Pick n Pay has been subject to the same business pressures as the other survey respondents. Having just completed an extensive effort to become even more efficient, future growth in profits needs to come from revenue and top line growth. They have centralized systems, for example, to avoid duplication and to buy advertising less expensively.
As with other businesses, too, Pick n Pay worries about silos which can thwart efficiency and effectiveness, especially when you need almost real-time adjustments based on what the electronic data stream is showing. The key device is to have interdependent KPIs for managers, such that their own individual economics depends on the ability of their cross-functional colleagues to team effectively.
A great feature of Pick n Pay’s leadership is that, despite the maturity of the business, the perspective is one of continuing adaptation. They see themselves on a journey — following and serving their consumers.
Pick n Pay Stores Limited
Headquarters: Cape Town, South Africa
Business: Own or franchise 1076 supermarkets and retail stores throughout South Africa and neighboring countries
Annual revenues: R73 billion (US$6 billion)
Brands: Pick n Pay, Boxer