Pep, Southern Africa's best known chain of retail stores, offers a variety of durable and up-to-date family clothing, footwear, textiles, household goods and cellular products to Africans from all walks of life with a particular focus on the very poor. There are over a thousand Pep stores throughout South Africa, Namibia, Lesotho, Botswana, Swaziland, Malawi, Mozambique, Zambia and Ghana. The company employs 9000 people, and had a turnover of R2.2 billion (US$ 208M) and an operating profit of R118 million (US$ 11.18M) in the fiscal year ending June 2000.
The brand began in the early 1950s as the brainchild of Renier van Rooyen, who started a small discount store to service the very poor in his remote hometown of Upington in the Northern Cape of South Africa. The store was one of the first white-run establishments to cater to the black community by providing quality, durable clothing at deeply discounted prices. It allowed black customers to see, touch and hold merchandise before buying – a break from the tradition that displayed all stock behind a counter. van Rooyen also created dressing rooms that would be used by both black and white patrons, refusing to participate in the apartheid conventions of the day (which would have separated not only the dressing rooms, but also the points of sale). van Rooyen soon began to open other stores in small towns throughout the country, trading as BG Bazaars.
It became clear by the early 1960s that van Rooyen would have to change the name of his stores to avoid conflict with a similar sounding store chain called OK Bazaars in South Africa. After turning down a list of possible names, he settled on a suggestion made by a traveling shoe salesman through Upington: van Rooyen's retail chain should be called "Pep."
The name struck a chord for a number of reasons. To begin with, it characterized van Rooyen himself, a hard worker who always demanded tasks be done "with pep." According to company literature van Rooyen liked the name because: "It has punch, and is easy to remember, pronounce and read in all South African languages. It means vigor, zest and energy, qualities that to this day characterize its staff."
Pep expanded quickly throughout South Africa. Its combination of no frills, solid value goods combined with savvy branding kept Pep almost synonymous with poor but proud marketing. By the time of South Africa's first democratic election in 1994, Pep had dominated the cheap retail sector for three decades. It was now perfectly poised to cash in on the newfound retail power of the heretofore disenfranchised black community, which had begun to be the focus of modern South African marketing. In the New South Africa, black buying power rules the day.
But Pep had become complacent in its middle age and was unprepared for the sweeping changes that would grip the country once every South African had the vote. The elections of 1994 came right before the dot-com revolution, a communication breakthrough that brought the world to South African TV and computer screens… and showed an impoverished, poor population what they had been missing. To the average black South African, having the vote meant finally attaining a measure of personal pride, and the opportunity to have real aspirations for success. Nelson Mandela was President, South Africa was the toast of the world, and a repressive dictatorship had crumbled into dust without so much as a shot being fired in anger – anything seemed possible.
Pep's target audience no longer wanted to buy on the cheap and cheerful. They aspired to own that which was previously reserved for whites only: branded clothing, Nikes, stereos and computers. They wanted credit cards, home loans, online banking facilities and the opportunity to walk into any restaurant without being turned away. Overnight, change seemed possible.
Pep, with its simple, no-nonsense, old-fashioned stores and its bargain-bin ethos, was no longer attractive – television now showed black South Africans frequenting the trendy bars of Cape Town and the posh suburbs on Northern Johannesburg. Pep's customer base slowly eroded throughout the 90s as banks, upmarket stores, restaurants and almost every single consumer goods sector changed its racial profile and began aggressively targeting the black consumer. Pep stores, by the turn of the millennium, seemed destined to become a relic of South Africa's past.
But then Pep started doing some serious brand management.
A new management team, under the leadership of managing director André Labuschaigne, was appointed in 1998. Labuschaigne, a believer in General Patton's remark that "If you tell your people where to go, but not how to get there, you will be amazed at the results," immediately embarked on a program to make Pep not only relevant to the changing expectations of its client base, but also to the severely demoralized staff who had watched the company decline for half a decade.
According to Labuschaigne, Pep has worked hard to offer its customers "good quality products and acceptable styles but still at the lowest prices…in a Wal-Mart kind of way." More importantly, said Labuschaigne, "We have also worked hard to give every employee a sense of belonging. These two factors are the main contributors to our so-called turnaround."
How did they do this? Labuschaigne helped initiate a new approach to his predominately black customers and staff. The vehicle he chose was Sikhula Kun Ye (we are growing together), a motto made up of green "people branches" that would permeate every aspect of Pep culture. Company songs were written and sung at Pep gatherings, the staff was encouraged to greet each other with a customary "high five," and new uniforms were issued. Pep also embarked on a massive retraining program and staff members who made a difference in sales and morale were called Dynamos.
Labuschaigne also began a process of motivating the staff through various communication media: face to face meetings, workshops, email, videos, conferences, monthly information sessions, newsletters and regional and national conventions. The Pep newsletter was changed from the dreary Pep News to the Africanized Kw@PEP, (at the home of Pep) – the "@" being a nod to a commitment to existing comfortably in the dot-com world. Labuschaigne points out that "By involving all our people in formulating our vision, mission and value system, we got a lot of people on board and they helped to create the change. All future programs stem from Sikhula Kun Ye."
According to Labuschaigne, "Pep fits perfectly into the New South Africa as we are probably the only retailer that almost perfectly reflects the population of the country." In other words, Pep isn't going to let itself be abandoned by the client base it helped to create. He says that the key to brand management is to "identify strengths and true values, involve people, shape a dream for them and relentlessly stick to this dream by doing everything, every day to achieve just that."
Labuschaigne also took charge of the company's marketing, sprucing up and revising company leaflets, training staff to use megaphones to advertise in-store specials, and encouraging staff to be on a first name basis with customers. The strategy has paid big dividends: as of this writing, Pep now has third place in brand recognition among South African retail stores, having enjoyed an almost 20 percent growth in the year 2001 alone.
Labuschaigne also works hard to make Pep an obvious contributor to black empowerment through a comprehensive social investment program that is aimed at the needs of its customers. It has helped fund education, development of entrepreneurship, and health and community advancement projects across Southern Africa. Pep management staff is mandated to become personally involved in these initiatives.
As far as the future is concerned, Labuschaigne said, "We will work hard at improving the value of our products, still at the lowest prices, and invest in training programs to differentiate our service at store level from other retailers."
Pep's goal is to grow into a brand known worldwide not only for the quality of its stores, but for its consistent efforts at black empowerment and the strength of its brand name.