Pick n Pay progress in its big “fresh” re-launch

march-pnp_saladsConvenience, health and freshness are huge trends among consumers of food. That is fundamentally why Pick n Pay last year undertook a huge re-launch of its fresh convenience food and produce offerings.
The launch was effectively from December, and by February about 300 new lines in convenience foods – ”heat and eat” – were in Pick n Pay stores, plus 100 new lines of produce. The roll-out started with the major corporate stores; it is now being extended to the franchise (Family) stores.
It has been a huge project which has included the formulation of recipes, marketing, design, logistics, etc.
Peter Arnold, Pick n Pay’s general manager fresh foods, says that the launch is still in its infancy, but there have so far been highly positive comments from consumers and sales are meeting expectations. Pick n Pay believes the new range represents the best SA has to offer in the prepared meals industry.
He says the first priority has been to ensure the quality of the products.
"Quality is of the highest importance. We have re-tested every product. We want our shoppers to change their perceptions of what fresh foods are. Previously, the perception was identical with frozen foods."
The new 300 convenience products include recipe ranges in Italian, Asian, meze, traditional, party, dessert and snacking.
In produce, the 100 new lines include steam products, value-added vegetables, cut fruits, exotic mushrooms, etc.
Although the total of 400 lines might sound like a lot, among Pick n Pay’s approximately 50,000 SKUs (stock keeping units), they risk being swamped. Arguably, Pick n Pay’s fresh housebrand products did not make much impact in the past because they were swamped by the sheer number of SKUs available in-store.
To combat this, Pick n Pay has dedicated particular areas of its display (open) fridges for the new fresh, chilled convenience food lines – often 5-6 linear metres.
And it is now setting up point-of-sale material – fridge banners and strips particularly – to highlight the new offerings.
To avoid commoditisation, differentiation was an important goal in the launch.
This is done via the different ranges, although within those ranges are many "staple" prepared meals like macaroni cheese.
It is also done by value-adding activities. For instance, in 50 stores Pick n Pay has had junior chefs with culinary knowledge to run demos; sales have been particularly good there.
Differentiation has also characterised outer packaging of the convenience meals – particularly the polypropylene film (see opposite page). This film allows for excellent graphics printability on the front – much better than conventional cartonboard – to show the products in as much glory as possible.
On the back of the packs are cooking instructions, ingredients nutritional information and other cautionary information (allergens etc).
The tray container for the meals is not particularly differentiated – Pick n Pay is always concerned with not raising its costs to consumers.
Housebrand structure
Linked to the across-the-board revamp in Pick n Pay’s fresh offerings are big changes in its housebrand structure/strategy.
Previously, its up-market, value-added, fresh housebrand was Foodhall.
Foodhall was intended to have an image of quality. Dedicated shopfloor areas were originally set aside for it.
For instance, the brand was used on bagged lettuce when that was first launched.
But bagged lettuce later became common and commoditised and it and other Foodhall products were moved from their dedicated areas.
Arnold says that there is now nothing to attract customers to the Foodhall brand, so it is being phased out.
Also being phased out is Pick n Pay’s Choice housebrand.
"It made no sense to continue with these brands because the overarching Pick n Pay brand is strong," he says.
So Pick n Pay’s housebrands have been simplified to:

  • No Name brand, which is retained for the more budget-conscious market.
  •  The new PnP (Pick n Pay) brand, which cuts across all the retailer’s divisions – fresh, groceries, etc – and will account for about 80% of its housebrand sales.

Overseas, major retailers also generally have a third, "finest" housebrand, and Pick n Pay will obviously work towards that, he says.
Obviously also, the number of products offered from the two different housebrands will differ according to the market level of different stores.
In this major expansion in fresh products, so far Pick n Pay has not expanded its number of suppliers, all of which have long experience in dealing with it and are familiar with its demands, scale and quality control, says Arnold.
It has rather concentrated on existing suppliers, of which it only has about 20 for fresh/chilled products throughout SA.
Says Arnold: "We told our suppliers we wanted to launch the new ranges. They agreed to gear up to do this. So we have invested in growth in our existing suppliers, to make them more cost-effective. Most are dedicated housebrand suppliers to Pick n Pay and do not have other activities."
However Pick n Pay has increased regionalisation of its supply lines for efficiency and economy. Its main base of suppliers is in Johannesburg and Cape Town, with a significant number also in KwaZulu-Natal.
Its largest single supplier is Tiger Brands Out Of Home Solutions (see opposite page).
"We are not currently looking for more suppliers. But down the line, if we have ranges which we want to develop and which existing suppliers cannot do, we will."
Power outages
On power outages, Arnold says there have been cases where suppliers cannot supply because of them.
All Pick n Pay stores have generators for basic functions; more are being installed to keep fridges running.
Where outages are for only a few hours, fridge doors are closed as far as possible and shielding is done on display (open) fridges.
Arnold says Pick n Pay rather than the supplier takes the knock when fresh produce is spoiled as a result of longer power outages, or any other reason.
In both fresh products and distribution, comparisons with Woolworths are inevitable. A major key to Woolworths’ success in its fresh products business is said to have been its control of the cold chain.
Late last year, Pick n Pay appointed Malcolm Green, formerly a Woolworths’ executive, to head its supply chain operations.
And in mid-2007, it opened its massive new distribution centre in Meadowdale, near Modderfontein, Gauteng. This distributes all fresh products as well as dairy and poultry to almost all stores in the northern regions – about 190 in total.
Arnold says it is examining its cold chain distribution facilities in other areas.
Arnold says there is considerable development in fresh organic products, although it is difficult to assess how strong demand is for these products until supply volumes increase.
Pick n Pay already stocks a fairly extensive organic grocery range.
Pick n Pay recently announced extensive support for the Organic Freedom Project and has strategies to grow the local organics market extensively. Already about 80 organic produce lines are in various Pick n Pay stores, from this project.
l NOTE: The Organic Freedom Project (OFP), a non-profit organization, is promoted by leading organics activist, David Wolstenholme. Jody Scheckter, of formula 1 fame and now one of the top five organic beef and dairy farmers in Britain, is chairman.
They persuaded Pick n Pay to participate in a scheme to create new jobs for miners after mine closures and on retirement, as well as rehabilitating land that was formerly used for mining.
Their aim is to identify and activate around 20,000ha for emerging farmer development, divided into 100 geographical zones, to includes organic farming training and consulting, with ongoing mentorship. – Teigue Payne