Group response to the COVID-19 pandemic

The COVID-19 pandemic is probably what 2020 will be remembered for years to come.

In South Africa, national lockdown protocols to prevent the spread of the COVID-19 pandemic dealt a significant blow to the already fragile economy, and the retail sector in particular. The trade restrictions imposed in terms of the national lockdown resulted in the group not being able to trade in its full merchandise range until June 2020.

This put pressure on our business, but it also had an impact on the livelihoods of our customers, as the need for food and basic products and services increased.

While the group prioritised the livelihoods of our almost 50 000 employees and put plans in place to ensure business continuity, in preparation for when trade would reopen, we also reached out to the people around us who really needed help.

At the outset of the COVID-19 pandemic, we made substantial donations that helped to kick-start the immense national relief efforts. We extended our partnerships with strategic organisations that had group-wide and national reach. Our employees, within their teams, initiated community-based projects.

The impact of the COVID-19 pandemic on our business was a R5 billion loss in revenue during FY20. Despite this massive, unforeseen event, the Pepkor group is in a privileged position that we could mitigate most of the impact.

As restrictions on business were directly linked to different levels of lockdown at different times across the world, we worked with all suppliers, employees and business partners on a collaborative basis to reduce any long-term business risk that could impact our ability to provide products and services to our customers.

  • We managed merchandise inflows in anticipation of lower consumer demand. With the bulk of the group’s product range defensively skewed towards basic, functional, everyday products that are sourced well in advance, it provided flexibility to delay and postpone orders where necessary
  • The bulk of winter merchandise was either in transit or had already been received. We could therefore supply basic and winter items, which were in high demand after the lockdown restrictions were lifted.
  • We renegotiated terms of property leases.
  • We fast-tracked and increased our e-commerce capabilities.
  • We introduced a more conservative approach to credit granting in view of the general economic pressure consumers were facing.
  • We diversified our manufacturing facilities to produce reusable fabric masks, disposable protective gowns for donations and customers, and screens and sanitiser stands for all group facilities, including stores.
  • Pepkor aimed to remunerate all employees in operations and support functions by using different measures and relief options.
  • The outcries on social media from new mothers who were not able to clothe their babies due to stores being closed was heartbreaking, and the group did everything in its power to resume operations as fast as possible. Our efficient supply chain and logistics infrastructure successfully dealt with significant bottlenecks in the distribution of merchandise to stores. Record service levels were achieved, allowing the group to meet pent-up demand from consumers for much needed products, such as winter and newborn baby clothing.
  • We joined forces with the rest of the country to address community needs. Across the group divisions, there were many initiatives. In many instances, they are unquantified, as employees reached out in their personal capacity.
  • Challenges arising from the COVID-19 pandemic dominated the board’s agenda from March until year-end, and will continue to be relevant in the future. The board adopted a highly active oversight role to support management, addressing a range of complex issues focused primarily on the safety of our employees and on ensuring the survival of the company’s businesses. It held weekly and then fortnightly meetings at which intervention strategies were discussed and agreed on, and key measurables were monitored.

Across the group, employees reached out in their communities to help those most vulnerable and affected by the impact of the COVID-19 pandemic. They either incorporated the COVID-19 plight into their existing initiatives, started new ones or identified ad hoc areas of need.

All our employees worked together to adhere to the rules put in place during the COVID-19 lockdown to keep themselves, their colleagues and our customers safe. As we started trading again, work continued with the least amount of disruption, and the group’s sick days and absenteeism maintained average levels compared to previous years.