Pick n Pay embarks on expansion drive, opens shop in Nigeria

South African retail giant Pick n Pay has recently released its interim results, indicating a 56.3% drop in comparable headline earnings, attributing this to the impact of the COVID-19 pandemic. Despite the challenging environment, Lerena Olivier, the Chief Financial Officer of Pick n Pay, remains optimistic about the company's performance and its ability to navigate the uncertainties ahead. With a strong focus on cost control and operational efficiency, Pick n Pay has managed to deliver core retail sales growth of 9.9% in South Africa, showcasing its resilience during these tough times. One of the key highlights of Pick n Pay's recent announcements is the surge in online retail sales and the acquisition of the Bottles app, a move that has generated excitement in the market. Olivier emphasizes the importance of online sales for the company, noting that they have doubled their online sales and have seen a 200% increase in active online customers. With plans to expand further into the online delivery space, Pick n Pay aims to cater to a broader customer base, including township economies, where online delivery services are still limited. Another significant move by Pick n Pay is its entry into the Nigerian market, a strategic decision amidst a backdrop of South African retailers withdrawing from the West African nation. Olivier outlines Pick n Pay's cautious approach to expansion, highlighting the company's partnership with a local player to gain insights into the market. By opening one store initially, Pick n Pay aims to learn and tailor its offerings to meet the needs of Nigerian consumers, leveraging its experience in operating across Sub-Saharan Africa. When questioned about the financial investment in the Nigerian venture, Olivier mentions that the capital expenditure is minimal, emphasizing a measured approach to assess the success of the operating model. The company remains positive about the growth prospects in Nigeria, confident in its ability to adapt and thrive in the new market environment. In addition to its expansion into Nigeria, Pick n Pay has been navigating challenges in Zimbabwe, a country with a complex economic landscape. Despite the political and economic headwinds, Pick n Pay's retail business in Zimbabwe has shown resilience, with market share growth and self-funding operations. The company continues to support its Zimbabwe operations and remains committed to serving the local community, showcasing a long-term investment approach in the region. Furthermore, Pick n Pay's commitment to fostering competition and fair market practices is evident in its decision to phase out exclusive lease agreements in shopping malls. By allowing other retailers to compete on an equal footing, Pick n Pay aims to uphold transparency and drive innovation in the retail sector, ensuring a level playing field for all market players. Looking ahead, Pick n Pay faces the challenge of sustaining dividends for investors amidst economic uncertainty and consumer pressure. Olivier underscores the company's prudent approach to liquidity management and cost efficiency, which have enabled Pick n Pay to declare dividends and offer competitive pricing to customers. With a focus on essential goods and cost-saving initiatives, such as Project Future aimed at finding savings of one billion rand, Pick n Pay is well-positioned to weather the economic storm and deliver value to its shareholders and customers.