Pepkor Sells More Nappies in 1 Minute Than BMW Sell Cars in a Year
From humble beginnings with one store in De Aar, South Africa in 1965, Pepkor has become an African giant as a holding company of more than 30 retail stores in 11 African countries. With a little over 5 400 stores, Pepkor’s subsidiaries sell mainly baby clothing, footwear, and textiles. While focusing on producing the needs, getting prices right, and getting close to customers this company has managed to outsell its competitors in 5 of the 11 counties they operate in.
Today this company sells more baby nappies in 60 seconds than BMW sells cars in a year.
How have they managed to do this?
They Focused On Producing “Needs”
From Arkermans selling mainly clothing, Pep selling baby products, Pep Home selling home furniture, to Pep Cell offering affordable phones, Pepkor has managed to acquire retail stores that offer needs for people. Baby products and baby clothing are essential, that’s why Pepkor has been able to stay open even during the Covid-19 lockdown in countries like South Africa.
The company has built a reputation for giving its customers the right products and continues to do so.
They Got The Price Just Right
It looks like Pepkor has found the sweet spot of pricing. Using the “high volume/lower margin model” the company targets the lower-income class in the countries they operate in. Particularly people who live in rural areas and growing urban areas.
This market does not have enormous amounts of money to spend on products as they live on minimum wages. Most of these people are not employed by the government and support their families from temporal jobs. A company that aims to target this market needs to get the price right, and Pepkor is doing just that.
They Got Close To Customers
Pepkor has not only built a reputation of giving its customers the right products at the right price but they also do so at the customer’s convenience. The company has dedicated its initiatives to giving customers easy access to its products and services. Pepkor’s subsidiary company Flash has small containers (like the one above) around South African townships in order to get close to the customers who do not afford to go to towns and malls.
During Apartheid in South Africa, retail companies were not allowed the sell for the black market. Even when this law was banned in 1994, most businesses were scared to serve the black market. But Pepkor along with another company called Shoprite were the first companies to build shops close to townships to carter the previously oppressed. Since then Pepkor has continued to nurture its relationship with the masses.
Conclusion
The defensive positioning for Pepkor lies in the three things I just explained above. Although the company is a long way from making figures like BMW it gives customers the ability to buy according to their budgets and prevailing economic conditions. While doing so, they manage to sell more nappies in 60 seconds than the BMW sells cars in a year. They understand the African market more than any business I know.
Pepkor has said that they “believe in giving people, especially those with limited disposable income, the opportunity to live their lives with dignity, respect, and pride”
Pepkor still aims to expand its presence in the rest of Africa by opening 50 stores in Nigeria, and I believe they will succeed in these new markets because of their understanding of the African market.
