As one of South Africa’s leading retail chains continues to close more stores this year, the question arises: Can a stronger shift towards e-commerce regain its footing in a competitive market?
For Pick ‘n Pay, the current landscape presents some tough challenges. Rising operational costs, increased competition, and a reduction in consumer spending have all contributed to the company’s struggles. If the company is going to survive, it’s going to need a drastic shift in strategy.
A Digital transformation, perhaps?
Looking at its eCommerce presence, it has made some strides with a 30% increase in online sales, largely driven by its click-and-collect service, and an 82% surge following its partnership with Mr. D for grocery deliveries. With South Africa’s online retail space continuing to expand, there’s a clear opportunity for Pick ‘n Pay to capitalise on these digital advancements to remain competitive. With their competitors growing stronger, they’re going to have to capitalise on this opportunity quickly.
The Rise of E-commerce in South Africa
The e-commerce market in South Africa is growing steadily, with the online grocery segment emerging as a key battleground. In 2022, online retail accounted for around 4% of total retail sales in the country, but this is set to increase rapidly in the coming years.
According to the South African Council of Shopping Centres, 39% of South African consumers have shopped for groceries online. This shift is due in part to convenience, greater access to smartphones, and the rise of last-mile delivery solutions.
Pick ‘n Pay vs Woolworths and Checkers: Who does E-commerce best?
When it comes to e-commerce, Woolworths and Checkers have been leading the charge for several years now. Woolworths has seen its e-commerce business grow by 25% year-on-year. Their investment in innovative solutions like “Woolies Dash” — which promises same-day delivery — has made their online platform a key part of their strategy. By focusing on high-quality products and a seamless digital experience, Woolworths has positioned itself as a leader in the premium grocery market, both online and in-store.
On the other hand, the Checkers Sixty60 platform has taken a commanding lead in the on-demand grocery space. Launched in 2019, Sixty60 allows customers to order groceries and have them delivered in as little as 60 minutes, with real-time tracking and competitive pricing. Checkers has managed to capture a significant portion of the market by making their app user-friendly, while also focusing on affordability, a crucial factor for South African consumers.
Sixty60’s Advertising Success
In 2023, Sixty60 expanded its reach to cover more than 85% of the country’s population, demonstrating its widespread appeal. This success is driven in part by Checkers’ effective use of advertising principles. Their campaigns for Sixty60 focus on simple and clear messaging, always emphasising the convenience and speed of one-hour delivery, which resonates with busy consumers. The ads are customer-centric, promoting both the time-saving benefits and affordability, which are central to Checkers’ brand.
Their consistent messaging across all channels—TV, digital, and social media—has reinforced brand identity, making the Sixty60 logo instantly recognisable. Additionally, Checkers has strategically partnered with South African influencers to build trust and credibility, further enhancing the effectiveness of their advertising efforts. This combination of innovative services and a strong advertising strategy has allowed Checkers to set itself apart as a modern, customer-focused brand.
Discovery Vitality’s Partnership with Checkers and Checkers Sixty60
In September 2023, Checkers announced an exciting partnership with Discovery Vitality for the Vitality HealthyFood benefit. This benefit, available both in-store and online, allows members to earn up to 75% back on healthy food purchases. The partnership officially kicked off on 1st September 2024, and it was nothing short of a bold debut, featuring world-renowned chef and healthy eating advocate Jamie Oliver as the face of the collaboration.
This again speaks to their great advertising and serves as a great response to customers’ shifting shopping habits, the convenience that comes with online shopping, and the reward that comes with making healthier food choices. Last year alone, 34% of Vitality members who order groceries online did so at least weekly, a testament to the increasing reliance on online grocery shopping.
How will this partnership give Checkers a competitive edge?
According to Daily Investor Vitality’s recent announcement comes just after they dropped Pick ‘n Pay as a HealthyFood partner. Although the reason for this decision was unclear, it may be due to their inability to keep up with other food retailers in the country, losing substantial market share to competitors such as Shoprite.
Discovery has also announced plans to partner with Woolworths and Woolies Dash so it should be interesting to see how the launch compares to that of Checkers and Checkers sixty60.
One clear thing, Discovery Vitality is expected to boost business growth in several key areas. With Discovery Vitality members able to earn up to 75% back on healthy food purchases through Checkers, the partnership is set to attract a health-conscious customer base, increasing both in-store and online traffic.
In addition, the partnership allows Checkers to tap into Discovery’s large, engaged membership base, which could lead to higher basket sizes and improved customer loyalty through rewards. Vitality members, who tend to shop for healthier options, are likely to benefit from the transparency and value Checkers offers, strengthening its competitive positioning in the grocery market.
By leveraging technology (and clever marketing), Checkers and Woolworths have insulated themselves from some of the challenges Pick ‘n Pay now faces. Their innovative online platforms allow them to capture new revenue streams, reach more customers, and reduce reliance on physical stores.
Is E-commerce the Answer for Pick ‘n Pay?
According to Daily Investor, Shoprite’s latest full-year results showed strong performance, with its Supermarkets RSA division achieving 12.3% sales growth and contributing 81% to group sales. Like-for-like sales growth was 6.3%, and Checkers Sixty60 saw a notable 58.1% increase in sales.
In contrast, Pick ‘n Pay struggled, with only 3% like-for-like revenue growth and an 87% drop in trading profit, leading to an R3.2 billion net loss, its worst in 57 years. Despite these challenges, Pick ‘n Pay’s online sales grew by 74.4%, driven by on-demand services, making it the second largest on-demand grocery provider in South Africa.
To help Pick n Pay regain competitiveness in the e-commerce landscape, focusing on practical online strategies is crucial. First, they could invest heavily in enhancing their digital shopping experience. Building on their partnership with Mr. D, they could expand their on-demand delivery options to rival Checkers Sixty60’s quick delivery model.
They should also share more content on their social media platforms aimed at showing consumers how easy their app is to use by providing step-by-step guides on its functions and perks. Additionally, expanding click-and-collect services to more locations will cater to customers who prefer to shop online but collect their purchases in person.
Next, Pick n Pay should strengthen its digital marketing efforts by leveraging influencer collaborations on social media platforms. This can help increase online brand awareness, create relatability and open up opportunities to partner with local chefs for example, putting them in a position to foster new partnerships similar to the Checkers-Discovery Vitality collaboration, which could attract a new audience and drive traffic online and in-store. Emphasizing affordability through competitive online pricing on essentials, digital discounts, and exclusive online bundle offers would appeal to price-sensitive consumers, positioning Pick n Pay as a value-for-money e-commerce retailer.
By focusing on these practical e-commerce strategies, Pick n Pay can strengthen its online platform and compete more effectively with Woolworths and Checkers in the digital landscape.
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