Pep_Stores - Pep Stores Retailing to low-income consumers...

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2000 3 1) 9 mo was, 'to and do the e Starbucks re challenge @ Pep Stores: Retailing to low-income consumers By Catherine McPherson, Steven Michael Burgess and Mlenpa Jerel T) .p Stores is an Every Day Low Prices (EDLp) I discount retailer catering to low income con- sumers in the various markets in which it operates. In addition to its core products of clothing, Íbotwear, and textiles, the stores stock a range of 'everyday home essentials'. The chain consists of over 1400 stores in South Africa and other African countries including Angola, Zambi4 Zimbabwe, Mozambique, and Ma- lawi and is the largest same brand retailer in South AÍrica. In existence for over 40 years, the Pep chain has been listed and delisted fiom the Johannesburg Stock Exchange, enjoyed periods of profitability as well as times of financial disappointment, and wit- nessed a changing consumer profile as South Africa transited lo democracy. Pep currcntly- has the Country-,s thírd highest Return on Operating Assets in the clothing industry, it is also the number three brand of clothing, it has the best retail distribution sysÍem, the biggest .\tore netw*ork and, most importantly, Pep believes it has developed the best bancl of people w-orking in retail in Sotúh Africa. Pep is privately owned by Pepkor, a South African- based investment holding company, which has inter- ests in various value retail chains in Africa. poland and Australia (See Exhibit I and 2 for pepkor mile- stones and curent organizational structure). In 2005, the chain sold over 400 million units at an average price of Rl4 per unit, and enjoyed a turnover of R5.9 billion and operating profit of R607 mitlion. Discovering a recipe fbr retail success Renier van Rooyen formulated a recipe Íbr retail suc- cess while running successful general dealership ancl clothing outlets in South Africa's Northern Caoe 'Source: @2009, University.of Cape Town Craduate School of Business. 'Under Apartheid legislation' people of mixed race ancestry were classified as Coloured, and included rnany Afrikaans-speaklng descendants oí the flrst Dutch sett]ers and Khoisan inhabitants of the Cape and inclenturecl Servants brought to South AÍiica from Malaysia. who often speak English in the home. province. He realized that poor people had little dis- posable income but their collective buying power was immense. His idea was to provide clothing cheaply - but not cheap clothing - to South Africa's low and middle income groups and capitalize on large volumes with low protit margins. Pep Stores (Pry) Limired was founded in Upington, Northern Cape, on 17 August 196-5, a time when people defined as 'non-whire' by Apartheid legislation were marginalized and treated like second-class citi- zens in South AÍiica. Many people of colour, espe- cially blacks, lived a large part of their lives in rural 'homelands', which were set out by the Apartheid government to enfbrce the segregated living of the different races and tribes. Although
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This note was uploaded on 03/16/2011 for the course BUSINESS 1 taught by Professor Joy during the Spring '11 term at American University in Bulgaria.

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Pep_Stores - Pep Stores Retailing to low-income consumers...

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