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How Pick n Pay and a start-up built an omnichannel strategy

Vincent Viviers and Enrico Ferigolli are the Heads of Omnichannel at Pick n Pay. This means that they are responsible for the different go to market strategies of the FMCG retailer and how they align with each other to give customers a holistic offering that allows them to shop when they want, where they want and how they want. It’s the wave of the future – but of course, the future is now.

Vincent and Enrico’s relationship with Pick n Pay began in 2018 when they partnered with PnP Liquor through their alcohol delivery app, Bottles. The entrepreneurial partners launched Bottles in 2016 at a time when Uber Eats didn’t exist in South Africa and Mr D was still a menu under a fridge magnet. Bottles wasn’t only South Africa’s first alcohol delivery app, it was a local pioneer in on demand shopping.

“We were at a braai, and we ran out of drinks, and started chatting about how great it would be if we could just press a button and drinks would magically appear in 60 minutes,” says Vincent. As these things go, the idea stuck, and an 18-month journey began to build the business.

The partners both had corporate backgrounds at Unilever and Google, amongst other positions over the years, which meant a strong understanding of the retail and tech space – although neither were developers.

“As budding entrepreneurs, we knew that we needed to start somewhere and learn as we went, so that’s what we did,” Vincent explains. “It took a while to find developers because no one in the country had built an on-demand shopping app at that point. The on-demand delivery economy was established overseas but it was non-existent in South Africa.”

Finally building and releasing the app in early 2016 was only the beginning of the journey, however. “The actual app and marketing our service was only one piece of the puzzle,” says Vincent. “The logistics part was extremely difficult. We launched, did some digital marketing and within a few days we had our first order. Just like that. And we had no logistical plan in place!”

The solution was Uber – the bottle store on the app got the order ready and Vincent sent an Uber driver to collect and deliver it. It soon became very apparent that the minimum viable product (MVP) Vincent and Enrico had launched had a target audience and high demand. There were soon ten dedicated cellphones receiving WhatsApps from partner stores on a non-stop basis and a fleet of Ubers running deliveries. It was an unsustainable model, but it proved the business concept. It was now time to invest in a more formal logistics solution.

“When we launched, one of the most difficult aspects was signing bottle stores,” explains Vince. “The fulfilment of the order begins in store and then we handle the delivery. Signing up individual stores was time consuming but there was a bigger issue. Each bottle store has individual product catalogues and pricing. There was no consistency, and it was an extremely manual process.”

Which was when the entrepreneurs hit on the idea of working with a large retail partner to bring consistency to the process which would allow them to fast-track growth and signup multiple stores in a short space of time.

Enter Pick n Pay. “We secured a meeting and the idea aligned with Pick n Pay’s own vision of the future, which included a clear need for an omnichannel strategy with a digital-first component. The customer demand was not yet there for on-demand delivery, but they already had a thriving online shop so there was a clear direction to where our relationship would lead.”

To pilot the partnership, two PnP Liquor stores were added to the Bottles app. Within three months, this had grown to 60 PnP Liquor stores across the country. The business was experiencing triple digit growth, employed 30 people and had a clear roadmap to the future. They had also built their own delivery force and invested in logistics software to tackle the volumes of on demand deliveries and to ensure their service was consistent.

And then, of course, a global pandemic hit.

Pivoting overnight

Roman philosopher Seneca once said, “Luck is what happens when preparation meets opportunity.” Put another way, business growth is what happens when the right foundations are in place to enable a fast and agile pivot, based on a team’s willingness to work hard and solve immediate customer challenges.

At this point, Pick n Pay had an online store with scheduled next-day deliveries. This side of the business had been operational for 20 years, but it was not an on-demand model, although the partnership with Bottles was one way the retail giant was working towards an omnichannel strategy that included an on-demand channel.

In March 2020, with restrictions and a hard lockdown looming, Vincent, Enrico and the Pick n Pay team met to determine what South Africa’s consumers were going to need in the upcoming weeks and months. Bottles had the whole system already in place, including the tech stack, drivers and customers. Pick n Pay had the retail inventory. A two-year working relationship was about to be taken to the next level.

There were a few things that were clear:
  • An alcohol ban had been announced (and the logistical nightmare that descended on Bottles for the two days leading up to the hard lockdown proved South Africa was stocking up)
  • Pick n Pay's own scheduled next day delivery service needed support to meet the massive surge in demand for online delivery of groceries (the sudden spike in volume resulted in initial delivery delays across different brands and the country of up to two weeks, or even more)
  • With restrictions around social distancing and mask mandates in place, consumers would be looking for a safe way to shop for essentials from their own homes (again, totally on point – the pandemic accelerated ecommerce by three to five years)
  • Bottles already had a direct line to consumers with 500 000 downloads of their app.
There was only one solution. Bottles would pivot from an alcohol delivery app to a grocery deliverer exclusively for Pick n Pay. But there was a snag – it had to happen virtually overnight.

Bottles’ start-up team and the Pick n Pay online team got to work. The key challenge was getting stores on board and updating the product catalogue – and if you take a moment to think about how many products are stocked on Pick n Pay’s shelves, you’ll get an inkling into the scope of what the team needed to achieve.

On Thursday, Bottles was a liquor app. By the following Monday, two Pick n Pay grocery stores were available on the app. By the end of the week, this had grown to 90 stores.

Between March and April, the app quadrupled its customer base and sales. The team also more than doubled and were all working remotely, with no face-to-face interactions. No in-store training could take place either – everything was done remotely.

Across social media, push notifications let customers know that the brand had pivoted from liquor to groceries and always-on marketing ensured that new customers who were looking for online shopping options discovered and downloaded the app.

Everyone was looking for home deliveries and thanks to the Bottles/Pick n Pay partnership, this demand was met quickly and efficiently.

“This was only possible because of our teams,” says Vincent. “We had the start-up energy and understood the app and the Pick n Pay team knew their business and their catalogues. Together, we worked flat out straight through the weekend to save our business and support South Africa. Overnight, we had a new process. It was an incredible experience.”

In 2020, the relationship was formalised even further, with Pick n Pay purchasing Bottles and Vincent and Enrico joining the retail giant to spearhead the brand’s omnichannel strategy.

LESSONS LEARNT

Build a business that can scale. Vincent and Enrico built a business that could scale. This included the partnership with Pick n Pay, as well as an investment into the technology and logistics required to deal with large volumes. No one can predict a black swan event like a pandemic, but with the right foundations in place, it was possible for Bottles and Pick n Pay to meet an immediate spike in demand. Today, there are nearly 400 stores on the Pick n Pay asap! app, a feat that would have been impossible in a short space of time if the app (and strategy) was built from scratch in March 2020.

Partner with the right people. Bottles and Pick n Pay began as a partnership, but there are other key partners in this story. For example, OrderIn, a large local food delivery app, came to a standstill during lockdown. Bottles’ orders had quadrupled and OrderIn had an idle driver force – it was only logical to partner up and integrate with them.

Ensure you are a consumer facing business. There are a lot of buzzwords in ecommerce and retail today, including ‘omnichannel’. “It’s easy to get caught up in the idea that you have to have an app and an online store and physical stores, but omnichannel is really about understanding that there is an evolution taking place in how people shop, and businesses need to be agile enough to meet those needs. We are building the future of how people will shop in retail. Don’t assume you know what that will look like. Instead, make sure you are building a business that can transform and digitise, regardless of the channel, to future proof yourself and ensure you can meet demand.”

Explore global trends. “In South Africa, because we are still a bit behind in this space, we have a great opportunity to research what has been trialed and tested in other markets, learn from them and pick the best things that we think will apply to South Africa. It’s a fine balance though. We have an infrastructure similar to the Western World but without the penetration. There are also uniquely South African challenges that we face.”

Build a winning culture for the future. “Your team is everything. To digitally transform a business as large and as established as Pick n Pay, we need the right team and culture that will take a traditional retailer into an exciting future-proofed future. There has been a massive shift in all of our ways of working, and that can be a challenge or an opportunity. We look at it as a way to ask what is the future and what is the office of the future? How do we combine the time and productivity gains of working from home with the collaboration of a team that comes together physically to ideate, innovate and build strong bonds? We’re experimenting with new models to find the formula that will support an exceptional team.”

Explore different ways to meet customer needs. Pick n Pay’s strategy includes multiple fulfilment models, including central distribution centres or dark stores and normal retail stores. “DCs are bigger facilities with larger ranges that allow us to have better control over stock because there are no in-store customers taking stock off shelves. This is much harder to do in operating retail stores when you don’t know what is walking around the store in a trolley. However, DCs only make sense in busy centres. For store to door in 60 minutes or less, the closest retail store to the customer is usually the best option. Similarly, if an appliance has been ordered that can be delivered the following day, the DC is once again the better option, because it can carry large stock like electrical appliances. The key is to have multiple channels all working together.”

Combine the strengths of corporate with the agility of start-ups. “Corporates tend to have a lot of bureaucratic layers, which makes it difficult to respond to changing market conditions with agility. Start-ups are the opposite – you can respond at speed, but there are no guardrails protecting you. Having been in both corporate and a start-up, the sweet spot is combining the support and scale of an iconic brand like Pick n Pay with the agility and flexibility of a start-up. That’s our focus and we believe it will be the foundation of the market leader in this space in South Africa.”
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