CASE STUDY:

The Pick n Pay Group developed its strategic turnaround plan in 2014. Its objective is to restore the business to a position of long-term sustainable growth. In promulgating the plan, the Group explained that a sustainable recovery would need to be achieved in a planned, considered and balanced way over a number of years, avoiding short-term actions which might weaken the business in the longer term.

The strategic focus of the business is to:

• Grow sales in line with or ahead of the market by providing great value, service and innovation for customers. Focus here is on delivering a first-class fresh, convenience and grocery offer, which gives customers unbeatable prices, value and service. The business is also developing a strong multiplatform and multi-channel retail offer, including standalone clothing and liquor stores and a burgeoning online business. In addition, the Group aims to continue to build its Boxer business into a thriving national limited-range discount format, and to continue to grow sales outside South Africa in a planned and prudent way.
• Achieve high levels of operating efficiency and lower costs to enable maximum reinvestment in the customer offer. Focus here is on completing the centralization of the Groups supply chain and other services, reducing the cost and improving the accuracy and responsiveness of distribution. The Group also aims to improve the efficiency and cost-effectiveness of its employee costs, both in stores and in its head, office structures, while minimizing increases in rentals, rates, electricity, water and other charges.
• Restore underlying profit margin to an historically sustainable level: Focus here is on improving the efficiency of the business in all areas, including by completing the centralization of supply chain operations, increasing productivity in stores and ensuring that support office functions are delivered to benchmark levels of effectiveness and efficiency.

The business devised a strategic long-term recovery plan in 2014, recognizing that a return to sustainable long-term growth could not be achieved overnight.

Question 1 (25)

There are several forms of innovation, types of innovation and characteristics of innovation that Pick n Pay can embrace in order to facilitate a more sustainable business. Provide a detailed discussion on what these are.

Question 2 (25)

Critically evaluate how Pick n Pay would incorporate a range of revenue generating mechanisms in order to ensure business sustainability.