INSTRUCTIONS TO CANDIDATES FOR COMPLETING...

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© IMM Graduate School of Marketing Assignment: 1

st Semester 2014 RM / RM001

ASSIGNMENT 1ST SEMESTER : RETAIL MARKETING (RM) RETAIL MARKETING (RM001) CHAPTERS COVERED : CHAPTERS 1 - 5 DUE DATE : 3:00 p.m. 18 MARCH 2014 TOTAL MARKS : 100 ARTICLE : EDCON’S RED SQUARE CASE STUDY : PICK N PAY

INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING

ASSIGNMENTS The complete ‘Instructions to Students for Completing and Submitting Assignments’ must be collected from any IMM GSM office, or the relevant IMM GSM recognised additional tuition centre or can be downloaded from the IMM GSM website. It is essential that the complete instructions be studied prior to commencing your assignment. The following points highlight only a few important notes.

1) You are required to submit ONE assignment per subject.

2) The assignment will contribute 20% towards the final examination mark, and the other 80% will be contributed by the examination, however, the examination papers will count out of 100%.

3) Although your assignment will contribute towards your final examination mark, you do not have to earn credits for admission to the examinations; you are automatically accepted on registering for the exam.

4) Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname, student number and subject at the top of each page.

5) The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper. Unless otherwise specified, this assignment must be completed within a limit of 1500 words, excluding the bibliography. Students who exceed the word limit may find that only part of the submitted assignment will be marked.

6) A separate assignment cover, which is provided by the IMM GSM, must be attached to the front of each assignment.

7) Retain a copy of each assignment before submitting, in case the original does not reach the IMM GSM.

8) The assignment due date refers to the day up to which assignments will be accepted for marking purposes. The deadline is 3:00 p.m. on 18 March 2014. Late assignments will be accepted, but 25 marks will be deducted from the maximum mark if received after 3:00 p.m. on 18 March 2014 and up to 5:00 p.m. the following day, after which no assignments will be accepted.

9) If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot accept responsibility for the return of the assignment. It may even result in your assignment not being marked.

Results will be available on the IMM GSM website, www.immgsm.ac.za, on Friday, 2 May 2014.

http://www.imm.co.za/

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SPECIFIC INSTRUCTIONS:

1. Read the case study and relevant article and answer ALL the questions in detail. 2. Use your own words to answer the questions! 3. Read each question carefully to determine exactly what is required before

attempting the answer. 4. Answers must be set out in a systematic way under appropriate headings and

sub-headings. Number your answers clearly. 5. Do not simply give theoretical discussions. Practical application is essential for all

questions and should form the bulk of your answers.

6. Take note that 10 marks are allocated to the presentation and layout of your assignment.

7. Make sure that you give a bibliography at the end of the assignment and provide references in the body of your answers where you have referred to other sources. Use the correct referencing method (Harvard system).

8. All answers must be based on either the attached case study on Pick n Pay’s premium strategy or the article relating to Edcon’s Red Square as indicated by the various questions.

9. Refer to the attached article on Edcon’s Red Square (after the case study) when answering Questions 1 & 2.

10. Refer to Pick n Pay’s website for more information on the premium strategy and The Falls outlet (http://www.picknpay.co.za/picknpay/content/en/thefalls). (Questions 3 & 4).

http://www.picknpay.co.za/picknpay/content/en/thefalls

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QUESTION 1 [15] Answer this question after studying the attached news article titled: Edcon continues online push. Red square sets up e-commerce offering. The news article identifies that in addition to the traditional stores, the Red Square brand will now be online as well. Required: Write a brief report where you highlight to Red Square’s management the benefits of the Internet channel and highlight some of the key challenges they will have to deal with when trading in this environment. Ensure that you link your discussion to the product category and that you discuss the issues and topics that are most relevant to the situation identified in the article. [Hint: In order to answer this question it is essential that you consult additional sources. Visit a library, search on the Internet, search for newspaper articles, or even arrange an interview with knowledgeable persons on the topic.] QUESTION 2 [20] For the year 2013 it was predicted by trendwatching.com that “consumers will look to their mobile devices to maximize absolutely every moment. Hectic, urban lifestyles mean that no amount of (micro) time will be too fleeting, or activity too absorbing, to cram in more content, connection, consumption or simply more fun. All of which means the next 12 months will see an explosion in MOBILE MOMENTS: products, services and experiences that will enable mobile-loving consumers to seamlessly embrace lifestyle multi-tasking”. The increasing use of the mobile phone not only for making a phone call or to send a text message but also to conduct shopping transactions is affecting the way in which consumers make purchase decisions. A retailer that wishes to survive in this online and mobile environment needs to gain a thorough understanding of how the decision- making process has changed and how it needs to adapt its marketing efforts to ensure that it is part of this new process. Required: Using the example of a 21-year-old student who wants to purchase a bottle of perfume from a Red Square online store, discuss how the increasing use of the mobile phone will affect each step of the buying process. Focus on identifying what elements you think will be affected at each stage of the process and what the retailer needs to do to adapt to the changes (at each stage). [Note: More emphasis is required for the discussion of steps 1-3 but ensure that steps 4-5 are also covered sufficiently. Research the topic in more detail to gain a better understanding of the impact of technology on consumer behaviour. Go beyond the points identified in the introductory statement.]

http://www.trendwatching.com/

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QUESTION 3 [35]

Pick n Pay’s store opened in Roodepoort (The Falls) represents a different approach to its traditional model. The title of the case study refers to it as part of Pick n Pay’s premium strategy. Whilst the store has been achieving some success, the manager has pointed out that it seems to be a week-end store judging by the first month of trading, which is “not exactly where we want to be”. Whilst the development of the premium concept is part of a growth strategy, a lot more still needs to be done to realise the planned objectives.

The strategic retail planning process is a set of steps that the retailer goes through when developing a strategic retail plan.

Required:

Practically explain the steps in the strategic retail planning process that the Pick n Pay ‘The Falls’ store will go through when developing a strategic plan in order to achieve its growth objectives (as described in the case study).

(Please note that step 2 should be explained in detail, as it will have more marks allocated to it than the other steps in the process. All other steps should however still be covered in sufficient detail).

[Hint: Refer to additional sources to gain greater information on the strategic retail planning process and the retailer in question. Practical application is essential and will count the bulk of the marks.] QUESTION 4 [20]

The Consumer Protection Act (68 of 2008) has been part of the South African business environment for a few years now. The content of this act has significant implications for retailers and it is therefore crucial that retailers familiarise themselves with its content in order to ensure that they comply with the act and its provisions.

Required: Write an essay on the implications of the content of the Consumer Protection Act for the Pick n Pay ‘The Falls’ store.

Focus on identifying the key issues that will have the biggest impact on the store identified in the case study. Identify the key points of relevance to the store and the specific changes that will need to be made. Provide practical examples to highlight the key issues.

[Hint: In order to answer this question it is essential that you consult additional sources. You should visit a library, search on the Internet, search for articles, or even arrange an interview with knowledgeable persons on the topic. As a starting point for your answer refer to http://www.labourguide.co.za/consumer-protection-act/.]

PRESENTATION [10]

ASSIGNMENT TOTAL: 100

http://www.labourguide.co.za/consumer-protection-act/

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ARTICLES FOR QUESTIONS 1 & 2

EDCON CONTINUES ONLINE PUSH. RED SQUARE SETS UP ECOMMERCE OFFERING

BusinessTech.co.za - May 29th 2013 Retail group Edcon has launched its Red Square brand online, the latest of its stores to head into the realm of e-commerce. The move follows the launch of CNA’s move to online retail in June 2012, and according to Edcon’s head of e-commerce, David Gibbons, the group is actively looking at which brands to launch next. Despite the move online, however, Gibbons said that the group’s main focus is primarily on its brick-and-mortar operations. “It’s still day one in terms of our e-commerce stores,” Gibbons said. “At this stage online is strategically and not financially important to the Group.” “It’s also worth mentioning that research has shown that for every order online you can generate 15 in store. Our online sites therefore act as a virtual window to our stores, so we expect the biggest gain to still be in the physical stores.” “Online shopping is growing in South Africa. Despite it being a small share of the market, we’ve decided to make our broad range of cosmetics available online because the increased sales are attractive to us,” Gibbons said. Red Square online (www.redsquare.co.za) Edcon’s Red Square stores offer over 3,000 brands relating to beauty, fragrance and cosmetics. “Cosmetics is a great category for e-commerce. It’s easy to ship and lends itself to online shopping. “Customers often know exactly what they’re looking for and a website can provide them with easy browsing of a huge range, good product information, customer reviews and insight about new products, for a rich shopping experience.” The new online store is an obvious push to draw in the growing market of tech-savvy females which, according to a Nielsen study, feel they are the most appropriate decision maker for health and beauty purchases, Edcon said. “Also it’s important to bear in mind that 92% of these women will share information with friends and family about deals and positive experiences. This is word-of-mouth advertising that cannot be ignored.” A unique feature of the site is the free sampling programme which allows customers to select three samples from the range of brands – which will be included with every online order. The store will offer free delivery on purchases over R350; otherwise a R45 delivery fee will apply. Source: http://www.fastmoving.co.za/news/supplier-news-17/edcon-continues-online-push-red-square-sets-up-ecommerce-offering-3790. [Accessed 3 June 2013].

http://www.redsquare.co.za/

http://www.fastmoving.co.za/news/supplier-news-17/edcon-continues-online-push-red-square-sets-up-ecommerce-offering-3790

http://www.fastmoving.co.za/news/supplier-news-17/edcon-continues-online-push-red-square-sets-up-ecommerce-offering-3790

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CASE STUDY FOR QUESTIONS 3 & 4

Pick n Pay’s new flagship store, The Falls, promises to bring the most environmentally friendly and exclusive shopping experience to West Rand residents in Johannesburg. In addition, the store boasts an array of fresh features – both in terms of product and display – to rival any other supermarket. Fresh start As Peter Arnold, director of foods, proudly announced at the November opening, The Falls is “quite spectacular” from a fresh perspective. As one of Pick n Pay’s premium stores, The Falls has a strong focus on fresh, which is evident from the moment that customers walk in amongst a bright display of fresh flowers. Stuart Duffield, GM of premium stores across the country for Pick n Pay, notes that the word ‘premium’ can be a bit misleading because in fact, stores like The Falls and On Nicol have the exact same pricing as any other store. The difference is that the stores boast a total offering with a wider fresh food appeal. They also have much larger restaurants – Thyme – attached to them than the coffee shop offering at other stores. It seems that no detail has been missed by the store development team. Customers even have the option of two completely different shopping experiences based on the store entrance they choose. All about the journey The entrance next to the restaurant leads straight into the fresh departments, starting with the bakery. Customers can choose from an extensive range of artisanal breads,

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confectionery, paninis and bread rolls. The other entrance is more centrally located and guides shoppers straight to the grocery aisles, flanked by the fresh produce on the left. For customers doing a pantry shop, this is the best way to enter the store. After a fresh greeting by the flowers at the first entrance, shoppers are treated to the deli on the right-hand side, which offers countless hot dishes, ready-prepared sandwiches and baguettes, as well as a salad bar. Customers are also treated to a selection of local and imported cold meats, some of which have been strung up just like a European deli. The service departments have been strategically situated at the front of the store to entice and excite customers, before being led through the fresh produce section to the dry grocery aisles. “The point is for shoppers to go through fresh, to experience the colour and smells, and be inspired by everything fresh,” says Duffield. In the far corner, sits the Fish Shop and butchery. The butchery is manned by trained blockmen who will cut to order if customers cannot find what they are looking for in the wide range of prepacked and counter cuts. Customers can also enjoy a selection of biltong and dry wors at the Biltong Bar. In line with customers’ demands for convenient meal solutions, the Fish Shop’s most popular items are the prepared cuts. The department currently stocks green and orange SASSI-listed seafood, which will be reduced to only the green variety within the next year. In addition, The Falls is one of the first Pick n Pay stores to stock the new Pick n Pay branded MSC-certified frozen hake. The fresh produce department illustrates Pick n Pay’s new approach to fruit & veg, which incorporates both the market-style loose presentation and the prepacks of before. “We still wanted to accommodate both types of customers,” he explains. Even the materials used for the display are different, with recycled plastic being used instead of the old wooden bins, which would discolour due to seepage. There is also a selection of organic and exotic vegetables to appeal to environmentally conscious customers and adventurous cooks as well. A real dining experience Instead of having to wait until the end of the shopping trip for refreshment, customers have the opportunity to buy something hot or cold before the shopping has even begun. There is a coffee bar plus a selection of smoothies and sorbets to choose from and be paid for at the till conveniently located right by the entrance to Thyme. Thyme restaurant caters for a wide variety of tastes, with the gourmet hot dogs and hamburgers doing particularly well. The sushi bar is very popular during the afternoon trade, with Chinese and local sushi chefs preparing each dish fresh as customers sit at the counter. The design team also installed an acoustic wall into the restaurant, creating a far more pleasant and quieter dining experience for customers. Duffield says that while the restaurant might be a little quiet during the week, the queues extend out the doors over the weekend.

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The restaurant and deli is managed by fully trained chefs, as well as Warwick Thomas, who participated in the recent Ultimate Braaimaster reality cooking show, which was sponsored by Pick n Pay. Staff has been sourced locally, trained by a third party and then given experience at Thyme On Nicol. Thyme on Nicol recently won the prestigious Rasa Rosetta Award in recognition of service excellence and contribution to the restaurant industry as a whole.

The bakery and butchery are also manned by seasoned bakers and blockmen, who are always available to cater to customers’ special requests. All the prep areas for the service departments are kept separate. Groceries – far from dry and boring The dry grocery aisles, traditionally the ‘boring’ part of any store, have been given new life with interesting and exclusive products. Customers can now even buy an iPad or Kobo e-reader (exclusive to Pick n Pay) while doing their grocery shop. The store boasts a full-service pharmacy with a clinic sister available to perform a range of tests. A diverse range of make-up and fragrances is available in the impressive beauty department, where trained specialists are on hand to offer advice and guidance. Customers can also choose from a wide range of liquor – from the wine cellar and champagne room inside the store to the Pick n Pay Liquor store outside. The idea of a shopping journey continues right up to the till as Pick n Pay has implemented the fair queuing system in the store. Customers are therefore led past a variety of treats, novelty items, cold beverages and magazines. “It has proved to work so well and 99% of customers love it,” says Duffield. At The Falls, they’ve even split the queue so on quieter days they can just run one side. There is also an express queue – conveniently located just around the corner from the deli – which is perfect for customers who’ve perhaps just popped in to grab some lunch.

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Quantifying the customers At the opening in early November, the team was unsure who the store’s customers would be as The Falls is in a very diverse area in the West Rand of Johannesburg. Duffield says it has emerged that the customer base is as wide as they first thought – ranging from a strong LSM 4-6 segment to a large number of shoppers in LSM 9-10. The store is open from Monday to Friday between 8am-8pm, on Saturday from 8am-6pm and Sunday, 8am-4pm. It seems to be a weekend store judging by the first month of trading, which is “not exactly where we want to be” says Duffield. It is, of course, too soon to say what the typical trading pattern will be, with a late in the month opening and December to skew results.

Full of features Throughout the store, it is evident Pick n Pay has taken care to find ways to inspire shoppers. From clever displays (recipe books, serving platters and olive oils) to two recipe centres that customers can even print from, foodie fun is encouraged. A feature only found in premium stores such as The Falls is the Cheese Room, which boasts over 300 different cheeses, including locally made Hijke cheese. Pick n Pay has also introduced the Coffee & Tea Pod, full of exotic and artisan varietals, as well as a Baking Pod that, complete with ready-made fondant, is every baker’s grocery shopping dream. There is also a demo counter near the checkout, where trained chefs whip up interesting dishes using recipes that are also available in the recipe database so customers can try them out at home. Some recipes are even available on high-gloss recipe cards so customers can take them home to add to their own recipe file.

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Developing local suppliers Pick n Pay prides itself on its development of local small suppliers, some of whom now exclusively supply its stores. These include a number of fresh produce suppliers whose entire crop is bought by the company. In terms of product range, The Falls has a similar offering to On Nicol, apart from some products that have been updated or launched recently. This procurement policy has been communicated to customers throughout the store via large bulkheads. “We are slowly nurturing and building small suppliers and building local economy,” comments Arnold.

Stock in-store The total SKU count for the grocery department is 17 500, with an additional 4 500 lines in the fresh departments to complete the store’s offering. Customers often believe there is more stock on shelf, but in fact, there is less – with many categories only having the leading brand, Pick n Pay’s own brand and one other. Around 15% of the offering is private label: No Name (budget), PnP (value) and Finest (Premium). Currently around 50% of dry groceries comes from the Longmeadow distribution centre (DC), with the rest being delivered directly by suppliers. The total back-end of the store is relatively small at 500m2, with the idea that there will be a better supply out of the DC as Longmeadow increases its range. The store has implemented a night shift for shelf-packing so that during the day, staff members simply have to top up. Obviously for the fast moving lines (around 200), these are merchandised all day and every day. During weekends, the night shift is brought forward to late afternoon. Around 70% of the staff complement is new, while the rest come from other Pick n Pay stores. Duffield says that most of the senior management is internal. Green design – inside and out

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Like the Nicol store, Pick n Pay took an eco-friendly approach to the design of The Falls store. Skylights were installed to bring daylight into the store, thus reducing electrical demand during trading hours. Heat pumps are used for heating water and solar control glass has been applied to the west-facing façades to reduce heat loads, making the air conditioning more effective and reducing power consumption.

Outside the store, LED lighting is used for illumination, while inside the entire store is fitted with dimmable fluorescent fittings for optimum energy usage, which adjust automatically, depending on the ambient lighting conditions. In addition, rainwater run-off from the roof, as well as water from other areas is filtered and stored in steel tanks and used for irrigation, while boiswales, which are designed to remove silt and pollution from surface run-off water, assist with retaining rainwater before it is absorbed into the ground. Only indigenous and water-wise vegetation has been used and watered through drip irrigation. Duffield says the refrigeration technology that has been put in the store is not only cost and energy efficient, it is locally produced. According to Grant Ford, engineering director at Matador Refrigeration, the unique design of the cascade system allows for cooler liquid refrigerant being supplied to the evaporators, maximising their efficiency and contributing to the already energy efficient plant. As opposed to the refrigeration system installed at Pick n Pay On Nicol, this system only provides for the refrigeration requirement and does not use ammonia as a refrigerant. To keep customers informed on how energy efficient their supermarket really is, a TV screen at the checkout displays the different readings throughout the day. “Everything is automated and constantly monitored,” adds Duffield. Customers are also encouraged to do their bit by using the recycling bins in the parking area. “This is Pick n Pay’s second, biggest green store in the country,” comments director of foods, Peter Arnold.

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Promotions in-store and out For the opening on 7 November, Pick n Pay printed a 44-page supplement in local newspapers. In addition, there was an announcement advert the week before in print and on radio, robot drops, three trailers driving around and many opening specials to attract customers. Pick n Pay’s Smart Shopper loyalty programme was also used as a platform to inform and promote the new offering in the West Rand. GM of premium stores, Stuart Duffield, says the uptake of Smart Shopper with new customers at The Falls was “exceptionally good”. “Smart Shopper is a real winner for us.”

The store is also working with the local community and helping various churches, schools and other organisations with donations and sponsorships. In its premium stores, Pick n Pay has taken the decision to completely de-clutter it of supplier point-of-sale material. All products that are on promotion stand out on shelf thanks to a Pick n Pay-red frame, as well as flashing electronic shelf labels. Duffield adds that in general, using electronic shelf labelling makes for a much more efficient store operation. “The idea behind the de-clutter is that when you are in a premium store with fresh, you’re not paying 1c more for the grocery items than any other store. Once the customer understands that, it’s just a beautiful experience without all the clutter.” For Christmas, the store had decorations made from recycled paper throughout the store, including a giant paper Christmas tree at the entrance and wreaths along the windows. Added value The store boasts many added extras, including third party payments, prepaid electricity and Lotto. There is also a travel kiosk, Berco box for parcel delivery, money

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transfer availability and soon, mobile banking, which is a collaboration between Pick n Pay and MTN. Pick n Pay The Falls has been developed on the site of a former driving range on Hendrik Potgieter Road in Little Falls, Roodepoort. The surrounding road network has been upgraded to make accessing the strip mall as easy and convenient as possible. Arnold admits that the company has taken a risk by having its own strip mall complete with Pick n Pay supermarket, clothing and liquor stores. Various other tenants have also opened small stores in the mall.

In terms of security, there is a controlled entrance and exit into the parking lot, although parking itself is free. The entire parking lot and store is monitored centrally by a sophisticated CCTV system. Within the store, there are guards – both uniformed and undercover. Two manager stations – one in the centre of the store and one in line with the checkouts – ensure that a supervisor always takes note of what’s happening on the floor. The fresh difference “We do believe we’ve put down a fresh offering that compares with everybody – and is better. The Falls has a wonderful premium look and feel but the pricing is the same as every other Pick n Pay store,” comments Duffield. Store management is happy with sales for the first month and was pleased with a busy Christmas period. Deputy CEO, Richard van Rensburg says the company plans on opening 15 more of these premium stores in the next 18 months. Source: Supermarket and retail. January 2013. http://www.supermarket.co.za/SR_Downloads/ S&R%20January%202013%20Storewatch-The%20Falls.pdf. [Accessed 22 February 2013].

http://www.supermarket.co.za/SR_Downloads/S&R%20January%202013%20Storewatch-The%20Falls.pdf

http://www.supermarket.co.za/SR_Downloads/S&R%20January%202013%20Storewatch-The%20Falls.pdf

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