Johannesburg – In a move that could be seen as a bid to lure shoppers away from its rivals, Pick n Pay is investing R500 million in making food items cheaper.
The retailer’s move comes as consumers are battling inflation that is stubbornly outside the South African Reserve Bank’s 3 to 6 percent target, while food inflation is closer to 11 percent.
In a statement issued on Wednesday, the retailer says the move also marks its 50th birthday as it is almost half a century to the day that Raymond Ackerman bought three small stores in Cape Town.
It says it is returning to its roots and getting cheaper for its customers by cutting the everyday prices of over 1 300 essential items, lowering fruit, vegetable and meat prices, and putting more than 1 000 items on special.
Group commercial executive Paula Disberry notes the retailers are under enormous pressure.
“The combination of low economic growth and job insecurity, combined with the impact on disposable incomes of high utility and transport costs, means that many South African consumers are having to cut back on all but the absolute essentials. Since foundation we've done what we can to help our customers provide for their families, and that is still our role today.
As a result, says Disberry, Pick n Pay is putting more than R500 million into reducing prices of essential goods.
“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 vegetables products like potatoes, tomatoes, mushrooms, avos and bananas.”
Pick n Pay has selected the products based on shopping trends, information gleaned from anonymous data from Smart Shopper cards as well as its own buying information, which shows where price pains are.
The retailer, which will publish its full-year results in April, 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, below consumer price index food inflation of 10.7 percent over the period under review.
BUSINESS REPORT ONLINE