Pnp Situational Analysis

Topics: Retailing, Online shopping, Shopping Pages: 9 (3396 words) Published: August 25, 2013


Situational Analysis, Key Issues & SMART Objectives
19 March 2013

Andrea Seegers - 12018037
Phumelele Msomi – 12018099
Sbongiseni Skweyiya - 12007206
i. Introduction – Pick n Pay Page 2
ii. Situational AnalysisPage 2
* Macro Page 2
* MicroPage 4
* Internal Page 7
iii. SWOT Analysis Page 9
iv. Key Issues Page 10
v. SMART Objectives Page 10
vi. ConclusionPage 10
vii. Bibliography Page 11

Introduction – Pick n Pay
Pick n Pay is one of Africa’s largest and most successful retailers of food, general merchandise and clothing. Pick n Pay was founded by visionary retailer Raymond Ackerman in 1967, he started out with four stores in the Western Cape and he says it took “10% capital and 90% guts”. The company was listed on the JSE Limited Securities Exchange in 1968 and grew into the leading retail group that it is today. Pick n Pay currently consists of 795 Hypermarkets, Supermarkets & Family Stores, employs 42 000 people and generates an annual turnover of R55.3 billion. Pick n Pay aspires to satisfy customer’s needs by selling quality products at competitive prices and providing courteous service in stores that are well located and pleasing to shop in. Pick n Pay has been struggling for the last two years, in the last year their profits declined by 39% and they have lost market leadership to Shoprite.

Situational Analysis
Economic Factors
Petrol price increase on the 6th of February 2013 was a new record high of R12.27 for 95 octane petrol in Gauteng and it was due to higher crude oil prices which contributed to the deterioration of the rand/dollar exchange rate. Every increase in the fuel price affects the fuel of the transport of retailer’s goods which in turn increases the RSP (retail selling price) of their products. (

Technology Factors
South Africa has been lagging behind in the online grocery retail sector due to low internet access. The introduction of the tablet has resulted in the growth in internet access and online shopping; more than 70% of tablet owners are shopping online. Pick n Pay and Woolworths are currently the most active players in this area and their current challenges are that they do not have the delivery infrastructure, security issues and credit card fraud but they are spending a lot of money to combat these issues and to prepare for the tipping point. The current barriers for the consumer with online shopping are as follows: * Consumers don’t trust the system; they want the option of being able to try the process before they have to buy. * Delivery charges, it is never free

* No interaction with the product
( Social Factors
The new upper-income (LSM 8-10)class of the black consumer is living in the urban areas, has a smaller family, is better educated, digitally savvy and earns a very high salary. They are also brand and quality conscious; they seek out the latest trends whilst watching the budget and want a modern & attractive shopping environment. This group is growing by 20% annually and their buying power is increasing fast and reshaping the marketing landscape. Black households are also the largest group in the middle-income class (LSM 5-7) and their numbers continue to grow steadily. (

Pick n Pay’s target market is split into three groups which are the premium market (LSM 8-10); main market (LSM 6-7) and the emerging market LSM 4-5). Pick n Pay has not been able to penetrate the emerging market as yet and this is what they plan to do whilst retaining the main and premium markets. Pick n Pay stores are split into...

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