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Case Study PNP

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148 views

Case Study PNP

Uploaded by

ndwalanethobeka3
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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31 May 2023 Case Studies

Technology and Innovation Strategy Management

The Rise and Struggles of Pick n Pay: A Journey from Retail Innovation
to Insolvency

Introduction market evolved, so did the challenges.


Pick n Pay, a prominent South African Checkers, for example, successfully targeted
supermarket chain, began as a pioneering lower-income customers through its Usave
family-owned business. Founded by Raymond stores, prompting Pick n Pay to acquire Boxer
Ackerman in the 1960s, Pick n Pay introduced to compete in this segment.
innovative shopping models that transformed
the retail landscape in South Africa through a
customer-centric approach, which was new Challenges and Market Shifts
(IDE-JETRO, 2024). Despite its groundbreaking Despite its earlier successes, Pick n’ Pay
beginnings, the company has faced significant struggled to adapt to technological
challenges in recent years, leading to its advancements and the rise of online shopping.
current state of technical insolvency The COVID-19 pandemic accelerated the shift
(Neethling, 2024). According to Wesserman towards online retail, with competitors like
(2024) “The group's trading profit declined by Checkers rapidly expanding their e-commerce
more than 87%, with its Pick n Pay stores capabilities. Pick n Pay's late adoption of such
suffering a R1.5 billion trading loss.” technologies left it vulnerable and could not
keep pace with the industry's transformation.

Founding and Early Innovations


It is argued that Raymond Ackerman, was Recent Strategic Missteps
inspired by modern supermarket practices in In an attempt to regain its footing, Pick n Pay
the United States, envisioned a retail engaged in several reactionary strategies,
environment where customers could freely including the acquisition of the Bottles app for
move around and select their own items, a online deliveries (Mungadze, 2020). However,
concept that was novel at the time. this move came too late to capture the initial
Ackerman's family had the resources to surge in online shopping demand during the
support his vision, leading to the opening of pandemic. Additionally, the company
the first Pick n Pay store, where customers attempted to revamp its stores, but these
could use trolleys to shop independently. This efforts were seen as superficial and failed to
innovation marked the beginning of Pick n resonate with changing consumer preferences.
Pay's rise to become one of South Africa's
largest supermarket chains.
Leadership and Management Issues
There is a belief that The Ackerman family's
Expansion and Market Dominance insistence on maintaining control within the
Pick n Pay introduced several customer-centric family led to internal challenges. As the market
initiatives, such as being the leader in environment grew more complex, the
supermarket incentive cards called the Smart company's leadership struggled to implement
Shopper program and pre-empting effective strategies. This is coupled with labour
competitors like Checkers. The company also relations struggles and high labour and
embraced a generous return policy, further productivity issues (Thomas, 2024 ). Add to this
enhancing its reputation. However, as the the challenges they faced in managing
31 May 2023 Case Studies
Technology and Innovation Strategy Management

technology infrastructure and with weak data acquires-on-demand-liquor-delivery-app-


bottles/DZQ587VPrYGqzXy2
capabilities with poor financial management
systems, with a 97.5% drop in profits Thomas, S. (2024). Pick n Pay - What went wrong?
experienced in 2022 (West, 2024), which may https://www.leader.co.za/article.aspx?a=3084
have contributed to the company's declining &s=6

performance and eventual technical Wasserman, H. (2024, May 27). Ackerman family to give
insolvency. up control of Pick n Pay.
https://www.news24.com/fin24/companies/a
ckerman-family-to-give-up-control-of-pick-n-
pay-20240527
Current State and Future Outlook
West, E. (2024, Jan,12). Pick n Pay changes management
Facing insolvency, Pick n Pay has announced structures to recover lost market share.
plans to close 35 stores and convert 70 others https://www.iol.co.za/business-
to the Boxer brand, indicating a significant report/companies/pick-n-pay-changes-
restructuring effort. These moves are part of a management-structures-to-recover-lost-
market-share-ac60db78-f95f-46e7-9056-
broader retrenchment strategy aimed at cost a15591e927ae
reduction and asset optimization. However,
the company's future remains uncertain, and it
must navigate a difficult path to restore
profitability and competitiveness.
Disclaimer: Property of Technology and Innovation
Strategy Management Module, at the
University of KwaZulu-Natal written by Dr L. N
Kunene
Conclusion
Pick n Pay's journey from a groundbreaking
entrepreneurial venture to a struggling retail
giant offers valuable innovation, adaptability,
and strategic management lessons. The
company's initial success was driven by
visionary leadership and customer-focused
innovations. However, its inability to swiftly
adapt to market changes and technological
advancements has led to its current
challenges. The ongoing restructuring efforts
highlight the need for continuous innovation
and agile management in maintaining long-
term business success.

References
IDE-JETRO (2024) Pick n’ Pay.
https://www.ide.go.jp/English/Data/Africa_fil
e/Company/southafrica06.html

Neethling, B (2024, May 27). Pick n Pay technically


insolvent.
https://dailyinvestor.com/retail/52289/pick-n-
pay-technically-insolvent/

Mungadze, S. (2020). Pick n Pay acquires on-demand


liquor delivery app Bottles.
https://www.itweb.co.za/article/pick-n-pay-

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