Johannesburg - Listed retailer Pick n Pay is to spend R500 million to reduce the costs of essential goods in celebration of its 50th birthday.
The company said on Wednesday that it would cut prices of more than 1 300 essential items, lowering fruit, vegetable and meat prices, and putting more than 1 000 items on special to mark the milestone.
Group executive of strategy and corporate affairs, David North, said the price cuts would generally be above 10 percent and, in some cases, above 20 percent.
Buying better
North said the company had spent the past three years working hard to be efficient, cost-effective and using strategies such as a centralised supply chain and buying better to trim costs.
He said this had given the group the leeway to invest in its customers.
However, North could not indicate the effect of the discounts on Pick * Pay margins as the company is in a closed period and due to report full-year results on April 18.
The company was founded by Raymond Ackerman in 1967 after he bought three small stores in Cape Town.
North said Pick * Pay had focused on essentials to relieve pressure on customers who are battling inflation.
The country’s inflation has remained stubbornly outside the South African Reserve Bank’s 3 to 6 percent target, coming in at 6.3 percent in February, while food inflation is nearly 11 percent.
North said although fruit and vegetables were the initial segments to show higher inflation caused by the drought, this will move into meat products soon as more animals were slaughtered, thus dropping meat prices.
Savings
Group commercial executive Paula Disberry said “customers will see immediate savings on the grocery items they buy most, and in fresh fruit and vegetables, and meat. Savings from our butchery include all mince, selected pork products and bulk beef and lamb packs, and on fruit and vegetable products like potatoes, tomatoes, mushrooms, avos and bananas.
“Today’s technology gives us tremendous insights into our customers’ shopping habits, needs and preferences. Our customers are clear. In tough times what they want most of all are value and low prices, and especially on fresh.”
In the half-year, Pick n Pay reported an 18 percent increase in profits to R381.8 million in the first half. Sales rose 7.2 percent and the interim dividend increased 24 percent to R2.99 a share during that period.
The group was unable to pass costs to consumers and capped food price inflation at 5.5 percent.