Integrated

Annual Report

2018


NAVIGATING OUR REPORTING SUITE

NAVIGATING OUR REPORTING SUITE

Our six capitals

Our ability to create long-term sustainable value for stakeholders depends on the use of various capitals within our business. The International Integrated Reporting <IR> Framework supports integrated financial reporting, and, in particular, the reporting of the Group's business model across these six forms of capital. Refer to "Our business model" on pages 20 to 21 for more information.

Financial

Human

Manufactured

Social and relationship

Intellectual

Natural


Our key stakeholders

The Group is committed to open and constructive engagement with all our stakeholders. Our business model and strategy are designed to consider and address the issues and concerns most relevant to our key stakeholders. Refer to the "Engaging with our stakeholders" section on pages 38 to 41 for more information.

Customers

Community

Employees

Suppliers

Franchisees

Shareholders


Our business acceleration pillars

The second stage of our strategic long-term plan is organised around seven business acceleration pillars. These pillars represent the material growth opportunities that can materially affect our ability to create value over the short, medium and long term. Refer to our "Strategic focus" section on pages 44 to 51 for more information.

Better for customers

A flexible and winning estate

Efficient and effective operations

Every product, every day

A winning team

Boxer–
a national brand

Rest of Africa – a second engine of growth


Previous

Our footprint
and formats


Our expansion programme is focused on growing the business by opening stores that reflect the changing habits and
needs of our customers and which will bring new customers and communities into the Pick n Pay family.

NUMBER OF STORES

  COMPANY OWNED 26 February
2017
Opened Closed  Converted
openings
Converted 
closures 
25 February
2018
 
  Pick n Pay 661 72 (13) 4 (2) 722  
      Hypermarkets 20 –  –  20  
      Supermarkets 237 10 (2) 1 (2) 244  
      Local 31 9 (3) 1 –  38  
      Clothing – standalone 156 29 (2) –  183  
      Liquor 214 24 (5) 2 –  235  
      Pharmacy – standalone 3 (1) –  2  
  Boxer 229 22 (5) 1 (1) 246  
      Superstores 144 10 (1) (1) 152  
      Build 31 3 (3) –  31  
      Liquor 34 9 –  –  43  
      Punch 20 (1) 1 –  20  
  Total company owned 890 94 (18) 5 (3) 968  
  FRANCHISE 26 February
2017
Opened Closed  Converted
openings
Converted 
closures 
25 February
2018
 
  Pick n Pay
      Supermarkets 299 7 (7) 2 (2) 299  
          Family 279 7 (5) 2 (2) 281  
          Mini-markets 19 (2) –  17  
          Daily 1 –  –  1  
      Spaza 6 8 –  –  14  
      Express 111 9 (1) –  119  
      Clothing – standalone 17 –  –  17  
      Liquor 181 35 (3) (2) 211  
  Total franchise 614 59 (11) 2 (4) 660  
  GROUP 26 February
2017
Opened Closed  Converted
openings
Converted 
closures 
25 February
2018
 
  Total Group stores 1 504 153 (29) 7 (7) 1 628  
  TM Supermarkets – associate 56 1 –  –  57  
  Total with TM Supermarkets 1 560 154 (29) 7 (7) 1 685  
  REST OF AFRICA FOOTPRINT 26 February
2017
Opened Closed  25 February
2018
 
  – included in total stores 140 6 (2) 144  
      Pick n Pay company owned 17 –  17  
      Boxer company owned 5 2 –  7  
      Pick n Pay franchise 62 3 (2) 63  
      TM Supermarkets – associate 56 1 –  57  
  – by country 140 6 (2) 144  
      Botswana 12 –  12  
      Lesotho 3 –  3  
      Namibia 38 2 (2) 38  
      Swaziland 14 3 –  17  
      Zambia 17 –  17  
      Zimbabwe 56 1 –  57  

The Group is intent on being the retailer of choice for all the communities it serves.

Geographic footprint

SOUTH AFRICA

1 541 stores

ZIMBABWE

57 stores

NAMIBIA

38 stores

ZAMBIA

17 stores

BOTSWANA

12 stores

SWAZILAND

17 stores

LESOTHO

3 stores

NIGERIA

Planned expansion

GHANA

Opportunity for expansion

1 685
STORES

Across all formats
and seven countries,
including our investment
in TM Supermarkets
STORES in Zimbabwe.


OUR STORE FORMATS

Pick n Pay is a multi-format,
multi-channel retailer with a strong
and diverse portfolio of stores.

Pick n Pay is an inclusive brand, not aimed at serving a single customer demographic, but focused on being the retailer for all – from the most affluent in society to those who are less fortunate and for whom price is of the utmost importance. The middle-income South African consumer, however, makes up the largest portion of our customer base. Pick n Pay operates on both an owned and franchise basis, providing a wide range of products and value-added services, and includes an online offering. Pick n Pay is focused on delivering an exceptional customer offer, including range, quality, price, availability and service. Pick n Pay has a strong growth plan, benefiting from the flexibility of its formats and its leaner operating model, and will focus on bringing its offer to communities where we are not yet well represented, including through small convenience stores.

Seven

countries

Nine

store formats
(including online)

1 382

stores

Pick n Pay is an inclusive brand, not aimed at serving a single customer demographic, but focused on being the retailer for all

7

countries

543

stores

(244 owned, 299 franchise)

3 000

average m2

17

new stores

PICK N PAY SUPERMARKETS

Pick n Pay supermarkets offer a wide range of groceries, as well as a targeted range of clothing, general merchandise and value-added services. Customers can buy everything they need, from a quick daily top-up to a larger weekly or monthly bulk shop. Fresh produce and butchery offerings are complemented by an in-store bakery, deli and hot food counter. Pick n Pay supermarkets serve a wide range of communities, from lower and middle-income families to the most affluent households. Product ranges are tailored to meet the needs of customers. Some stores focus on basic necessities and local produce while others boast specialty service counters, wine rooms, flower markets and sushi bars. Pick n Pay supermarkets trade under the Pick n Pay, Family, Daily and Mini-market banners.


South Africa

country

20

owned stores

15 000

average m2

PICK N PAY HYPERMARKETS

Pick n Pay’s largest format store, providing customers with an expanded range of groceries, clothing, liquor and general merchandise. A hypermarket is a “one-stop shop” offering fresh produce, a butchery, deli, bakery and hot food counter, plus specialist categories not always available in a supermarket, such as appliances, kitchenware, home improvement, garden and pool accessories, toys and an expanded health and beauty range. These retail sites are large, catering for destination shoppers, with wide aisles and ample parking. Prices are very competitive, leaning towards multi-pack and bulk-buy items and a wholesale offering.


South Africa

country

38

owned stores

1 000

average m2

9

new stores

PICK N PAY LOCAL

Pick n Pay Local stores offer neighbourhood convenience, serving a range of communities, focused on lower and middle-income families. A Local store has a much smaller range than a traditional supermarket, tailored specifically to the community it serves. The range is focused on fresh and convenience, and can include a bakery and butchery. Customers can pop in quickly for a daily top-up, but can still choose from a tailored grocery and general merchandise offer for a larger weekly shop.


South Africa

country

119

franchise stores

300

average m2

9

new stores

PICK N PAY EXPRESS

Pick n Pay’s partnership with BP, one of the world’s leading international oil and gas companies, provides small 24-hour Pick n Pay Express convenience stores on BP service station forecourts in South Africa. Pick n Pay Express offers a targeted convenience range that satisfies an immediate top-up shop or a quick meal solution. The range is limited and is mainly focused on daily needs. These sites are located in high-traffic-flow areas, including high-density residential areas and public transport intersections.

Pick n Pay clothing

Pick n Pay liquor

4

countries

200

standalone stores

(183 owned, 17 franchise)

450

average m2

29

new stores

PICK N PAY CLOTHING

Pick n Pay Clothing provides the whole family with quality, fashionable clothing and footwear at exceptional prices. Our clothing offer is broad, from baby and children’s wear to men’s and ladies’ fashion – including casual wear, sleepwear, active wear and more formal attire. Our own brand, Real, is complemented by our exclusive rights to the international brands Cherokee and Maui & Sons. Our standalone clothing stores provide the same quality and value for money clothing merchandise as our hypermarkets and supermarkets, but with an extended range.


South Africa

country

delivery within

24 hours

Pick your

one-hour

delivery slot

PICK N PAY ONLINE

Our online shopping platform at www.pnp.co.za is a small but growing part of the Pick n Pay business. Pick n Pay is the largest online grocery retailer in Africa. The division is winning customers by offering online convenience, good availability and delivery in one-hour time slots. The online offer in the Western Cape and Gauteng has been expanded through the establishment of dedicated online picking warehouses.


6

countries

446

stores

(235 owned, 211 franchise)

200

average m2

59

new stores

PICK N PAY LIQUOR

Our liquor stores are situated close to our supermarkets and hypermarkets but with separate entrances. These stores offer a range of wine, spirits and beer, including trendy and innovative local craft products. These liquor stores provide customers with the added convenience of purchasing liquor at the same time as doing their grocery shopping.


South Africa

country

29

in-store pharmacies

(26 owned, 3 franchise)

2

standalone stores

PICK N PAY PHARMACY

We are committed to giving our customers convenient and affordable basic healthcare by providing a wide range of vitamins, supplements, sports nutrition, self-medication, medical services, clinics and dispensaries.


South Africa

country

14

partner stores

(26 owned, 3 franchise)

70 – 300

average m2

8

standalone stores

PICK N PAY SPAZA

Our “Spaza-to-Store” partnership with the Gauteng Government’s Department of Economic Development provides spaza shop owners with access to Pick n Pay’s procurement and distribution channel, business systems and technology and management advice and mentoring. Our partnership with spaza entrepreneurs across Gauteng and the Western Cape has revitalised and modernised their stores and delivered strong growth.


OUR STORE FORMATS

Boxer

Boxer is fast becoming
South Africa’s leading limited-
range discount supermarket.

Our Boxer stores provide a “one-stop shop” for middle to lower-income shoppers in South Africa and Swaziland.

Boxer offers a tight range of quality products and services at very affordable prices. Stores offer essential daily commodities such as maize meal, rice, samp, sugar, oil and beans, as well as perishables, health and beauty, general merchandise and bulk-buy offers. The stores also offer fruit and vegetables, butcheries, bakeries and deli sections providing a choice of prepared convenience meals.

There are no franchise stores under this brand. While Boxer has reach across all nine provinces in South Africa, its geographical heartland is KwaZulu-Natal and the Eastern Cape. Boxer will continue to grow and expand in areas where the Group knows it can serve the needs of communities through its wide product range, affordable prices and community-rooted staff.

South Africa
and Swaziland

countries


Four

store formats


246

stores

Our Boxer stores provide a “one-stop shop” for middle to lower-income shoppers in South Africa and Swaziland.

South Africa and Swaziland

countries

152

owned stores

1 850

average m2

10

new stores

BOXER SUPERSTORES

Boxer Superstores are full-service supermarkets offering a focused range of groceries. The fresh produce offering is complemented by an in-store butchery, bakery and hot foods counter. The target markets are middle to lower-income urban, peri-urban and rural communities of South Africa and Swaziland. All stores are located close to public transportation hubs and have a welcoming market-style atmosphere.


South Africa

country

20

owned stores

400

average m2

BOXER PUNCH

Boxer Punch is a smaller-sized supermarket located in compact sites that have considerable customer foot traffic. The store has a lower-cost operating model, enabling the business to further reduce the selling prices of products. Boxer Punch stores offer a limited but specific range of convenience products, including basic commodities, prepacked frozen and fresh meat, and a limited range of breads and confectionery.


South Africa

country

31

owned stores

550

average m2

3

new stores

BOXER BUILD

Boxer Build stocks a diversified range of building and hardware supplies, satisfying home owners’ and builders’ DIY and home improvement needs at the most competitive prices. Boxer Build stores offer savings cards and access to short-term credit facilities. Delivery of purchases can also be arranged at store level.


South Africa
and Swaziland

country

43

franchise stores

185

average m2

9

new stores

BOXER LIQUORS

Boxer Liquor stores are situated close to Boxer supermarkets, but with separate entrances. These liquor stores provide customers with the added convenience of purchasing liquor at the same time as doing their grocery shopping.

TM logo

The Group has a 49% investment
in its associate TM Supermarkets
in Zimbabwe.

TM Supermarkets, trading under TM and Pick n Pay, is one of the most trusted retailers in Zimbabwe. With its pay-off line “Real Value Always”, customers are offered a wide range of groceries and perishables, with a limited range of general merchandise and a fresh offering that caters specifically for the communities they serve, at competitive prices.
TM Supermarkets draws its customers from all communities and income groups across Zimbabwe, while store formats range from convenient small supermarkets to larger supermarkets.

57

supermarkets in Zimbabwe

40



trading as TM

TM

17



trading as Pick n Pay

PNP logo