Lockdown | Even as an essential service, we won’t emerge unscathed, says PnP CEO

Despite being able to operate during the current lockdown,
Pick ‘n Pay says no business is going to emerge on the other side of the
coronavirus pandemic unscathed.

The retail group has been selling food and other essential
items since the lockdown began, but the items it cannot sell include some
general merchandise, cigarettes and alcohol, while sales of clothing and
footwear only resumed recently.

CEO Richard Brasher said these “off-limit”
products make up 20{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of Pick n Pay’s revenue.

‘No one got wealthier’

“I think there’s sometimes a feeling that because we
are essential services, because we are open, that everything we sell is
available, but it’s not…Also just general reduction of consumers’ overall
ability to spend is also a feature here. No one actually got wealthier during
this crisis,” said Brasher.

He said the products that the group could not or still
cannot sell, save for tobacco, are margin accretive, meaning they contribute a
great deal in increasing Pick n Pay’s profits.

“They were quite successful categories. They were
higher than average,” said Brasher about the contribution of alcohol and
tobacco products to Pick n Pay’s bottom line.

The additional costs of sanitising its stores and temporary
closures of different franchises when staff tested positive for Covid-19 were
also eating into Pick n Pay’s bottom line, he said.

“It’s always a challenge. When the first case is cited
[in Pick n Pay stores], there’s always a lot of noise and emotions around it.
Sadly, more people will get [the virus],” he said.

While this presents an ongoing challenge, Brasher said store
managers have become “sleek” at cleaning, sanitising and tracing
people who have had contact with the concerned staff member as soon as a
positive case is confirmed.

“Clearly it’s disruptive. It’s disruptive for staff.
It’s disruptive for customers, but that’s the price of it,” he said.

Consider the economy

The retail group’s chairperson, Gareth Ackerman, said while
businesses understand the challenges faced by government now, it needs those in
charge to consider the strain put on the economy.

“My plea is in charting the way forward, the government
gives due emphasis to the impact on the economy, on livelihoods, on companies
that provide jobs and on the tax revenue which funds the work of
government,” said Ackerman.

Brasher said government has been engaging the business
community, more than it ever did before. However, clearer communication would
be welcome.

“I have to say business is being engaged. But it’s a
bit difficult, on occasion, getting super clarity about what you can and can’t
sell. And when you can and can’t do something,” he said.

Shopping patterns changing

As SA is now more than six weeks in lockdown, people have
stopped panic buying of white rice and toilet rolls – which saw 186{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} and 82{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}
increase in sales respectively in the weeks preceding the lockdown.

They are now into paints and brushes (288{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} sales increase),
play dough, frozen pizza and non-alcoholic beer, which have all either more
doubled in sales volumes since March 27 or are close to doubling.

Pick n Pay has also recorded a 200{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} increase in customers
actively transacting online for home deliveries, as more than 144 000 new
customers registered on its app.

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