Beyers van der Merwe of PEP Stores on Staying Digitally Relevant to Your Customers


As a retailer, what does it take to drive deeper customer engagement? And how does one successfully navigate a full corporate rebrand during a global pandemic?

Beyers van der Merwe, the CMO of PEP Stores, has the answers. So, let’s take a look through the lens of this popular brand with thousands of brick-and-mortar locations in multiple countries, and a customer base that relies heavily on mobile communications and ecommerce. 

In this episode of CleverTap Engage—our podcast and video interview series spotlighting marketing leaders who are achieving meaningful and memorable customer engagement—co-hosts Peggy Anne Salz and John Koetsier speak with van der Merwe about staying digitally relevant in the world of traditional retail.

Founded in 1965, PEP is Africa’s largest brand-retailer, operating more than 2,500 stores in Southern Africa. It sells 760 million items per year—clothing, footwear, home and cellular—including more prepaid cell phones than any other retailer in the region. Van der Merwe has been with PEP for the past 15 years, playing a critical role in the strategic, commercial and creative aspects of the brand.

Being Customer-Centric Means Always Listening

With new digital communications platforms emerging on a regular basis, it can be challenging for a brand to keep up. As van der Merwe tells us, PEP follows a simple and consistent strategy to “move where the customers go. We need to make sure that whatever channel in the digital world is relevant to a customer and we can service that channel, we will be there.”

This customer-centric approach applies to the brand’s identity as well. PEP knew it was time for a brand refresh when feedback from customers reached a tipping point, says van der Merwe. Their overall sentiment was, “It’s time to refresh. We really love you, but we need you to put on a new jacket. Your positioning is clear, but it needs to be refreshed.” PEP had the validation it needed to proceed with the change, even in the midst of a global pandemic.

The brand’s evolutionary new identity has been well received, but one customer’s dissenting opinion offered a lesson in just how invested PEP’s fans are in their favorite store. When the new logo debuted on social media, “one customer commented, ‘They didn’t ask me if they could change the logo,’” van der Merwe says. “That’s how much they care about this brand.”

Being Digitally Relevant Doesn’t Necessarily Mean Ecommerce

During the pandemic, many brick-and-mortar retailers fortified their ecommerce capabilities to meet the new market reality. Ecommerce wasn’t an option for PEP Stores, however, as its customer base is not comfortable with it. Instead, van der Merwe tells us, PEP encouraged use of the website to check on the in-store availability of products, so customers could avoid the time and expense of traveling long distances to stores only to find the product sold out. “For us, it’s not about the Buy button, it’s about being digitally ready and relevant to our customers.” 

In Southern Africa, nothing is more digitally relevant than mobile. “90% of our [digital] engagements and visits come from mobile phones,” van der Merwe explains, adding that PEP’s customers use mobile phones as their in-store transaction platform. “If you’re not there [to service that need], you’re absolutely dead.” 

This includes maintaining a presence on messaging platforms like WhatsApp, and facilitating Unstructured Supplementary Service Data (USSD), a code-based mobile banking mechanism for those without smartphones. The one requirement PEP has for these channels, according to van der Merwe: “For our core customer, it needs to work.”

To hear more lessons from Beyers van der Merwe—including discussions of customer loyalty, marketing across cultures and languages, and managing supply chain issues—listen to the entire episode. And there’s a full transcript below.

 

 

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Full Transcript

Beyers van der Merwe: For us it’s all about… We move where the customers go. And we need to make sure that whatever channel in the digital world is relevant to a customer at that stage and we can also service that channel, we will be there.

John Koetsier: How do you drive deeper customer engagement in retail, especially across 12 countries, 2,400 stores, while mixing traditional retail with e-commerce and mobile commerce in a digital transformation during a global pandemic, plus throwing in a complete corporate rebrand? Welcome to CleverTap Engage. My name is John Koetsier.

Peggy Anne Salz: And my name is Peggy Anne Salz. That is a tall order indeed. Amongst all of that, we’re talking about engagement, as usual, but we’re going to do it today with the CMO of Africa’s biggest single brand retailer. Some stats to give you some idea here, the context. They sell 760 million items a year in 300 million transactions annually, including 55,000 pencils per day, and more prepaid cell phones than anyone else in South Africa. So we want to welcome our guest, Beyers van der Merwe. He is CMO of PEP Stores. Welcome, Beyers. Great to have you here.

Beyers van der Merwe: Thank you very much. Thanks, John. Thanks, Peggy. It’s a great introduction. It’s all about the pencils, huh? 

John Koetsier: Wow.

Beyers van der Merwe: It’s a rather big pencil, yeah. 

John Koetsier: That one’s only for signing the really big deals.

Beyers van der Merwe: Exactly, yeah. Great to be here.

John Koetsier: Let’s start here. We’ve been going through this craziness globally. What has marketing during the global pandemic been like for you? 

Beyers van der Merwe: I must say that we, every time we have to revisit and just take ourselves back into what we’re doing during these phases, there were big shifts in South Africa. I think there’s global shifts that we’ve all seen. But in South Africa, because of the huge unemployment rate that’s high in the thirties and a lot of other challenges, there were actually quite big things that we had to quickly do. For me as a marketer, it was amazing to see how quickly customers reacted, quickly in a good way and in a bad way. With what they purchased, how their shopping behavior changed. Yeah, the pandemic really got us to think in a different way and act differently.

There was a lot of job losses in our customer base, so hugely impacted. And it’s all about, what do you do now, as a marketing function, to shift your focus? As an example: For driving, we were so used to driving feet to stores, end of the month when the money is in the market, and make sure customers all get there at the same time. All of a sudden, that’s no longer possible. So we had to think about promotional strategies that stretch your timing of when people go to stores, and you’ve got to run your promotions for longer so that we don’t all send customers to stores at the same time because they want a safe shopping environment. We quickly had to adapt. 

Thinking back, there were so many big winds around changing process, changing the speed, changing your ability and being a lot more agile. So yes, it was tough. It’s still tough being in it, but I think that the good from it has just overshot the bad, by far.

Peggy Anne Salz: What I liked in what you said in one of your speeches or presentations, Beyers, is that COVID was your digital transformation officer within the company. I think that nails it right there. 

You’re talking about how you also needed to interact with your customers differently, engage with them differently because they were coming into the store.

Beyers van der Merwe: Yes.

Peggy Anne Salz: Lockdown, they’re not coming into the store. So you have to blend and blur, digital and physical. How did you do that? 

Beyers van der Merwe: I think that’s probably one of the toughest things that you had to do a mind shift on, where you’re so used to running a physical store. In our world, remember, our customer base is – 80% still pays cash. So switching to an e-commerce phase is not as easy and it’s not actually a space that our customers are very comfortable with. Running a physical store, or 2,500 stores, for 55 years, it’s a big shift. I think that’s also why I said the Corona was definitely the digital transformation officer because it just put the focus around, it’s not about the buy button on… For us, in our case, it’s not about the buy button, it’s about being digitally ready and relevant to our customers. 

So we did different things on a digital platform. We got customers to check if the products are available before they go to a store because they take public transport. It actually costs them a lot of money, and then they would spend two or three dollars in the store, so it’s small purchases. So any decision where they go and they waste time, costs them money.

We’re currently not selling online but we did a lot of e-commerce-ready and almost added that layer for a customer where they still go to the physical store. The good thing about a footprint as large as… There’s stores everywhere, so it helps with that. So there’s still a physical footprint but they can check online if the products are available and therefore, not waste time.

I think it’s extremely important that it’s not separate things. I always say it’s your digital store, your biggest store, it gets the most visits. Most people go there. So you need to make sure that that shop is really in order and that all the structures… In our world, we have an area manager or a regional support manager. So your digital platforms also need that. It needs to be well-equipped to run and to make sure that it’s a great experience for your customer.

John Koetsier: I love that part about COVID being your chief digital transformation officer because what we’ve seen in the past is that companies needed a massive burning platform to make significant global change. And many couldn’t sum that up pre-COVID, but found COVID to be the impetus to really make extensive change across the entire company. 

Want to talk about what channels you’re using and what channels you’re developing. Clearly, you have the store, you also have the website, you sell a lot of mobile phones. What channels are you thinking that the future will hold for you in terms of e-commerce, mobile commerce, mixed with physical retail? 

Beyers van der Merwe: For us, it’s all about… We move where the customers go and we need to make sure that whatever channel in the digital world is relevant to a customer at that stage and we can also service that channel, we will be there. 

Constantly, we put on new channels. I think it’s sometimes quite scary as a CMO to see the amount of new things being launched and where customers go because they move very quickly. I think that’s always a challenge because some of the things, they can look very pretty, and they can look very aspirational. But especially for our core customer, it needs to work. It needs to be low on data, so those things are still very relevant. So we’ll adapt and change platforms as our customers’ eyes move. When the eyes and ears move, we move with them. 

Peggy Anne Salz: WhatsApp is extremely popular, and messaging seems human. Again, you don’t have to, but you want to say, “Look, this is really in stock” or “Do you want to check if this is in stock?” What channels are enabling that ongoing conversation, not just the selling as you said? 

Beyers van der Merwe: It’s a very good point and WhatsApp is a great example. If you ask a consumer today in South Africa, social platforms like… or platforms that they use every day, WhatsApp is a huge one. And then even goes a little step down to a USSD, which is a dialup code onto a phone. It’s a very simple code texting that they use in South Africa as well. But it starts there. So your digital channels or your communication channels on USSD, WhatsApp, where relevant products get communicated, making sure that you can communicate and service that experience there straight all the way up to a very fancy website. 

We’re currently re-platforming our website and we’re doing stuff on the internet to make it more mobile-friendly. Again, it’s like it’s always on. You can move away. You need to make sure that in your customer base, in your offering, you share the relevant stuff on these platforms. Because if they can consume lots and lots and lots of content and take a lot of time as well, you need to make sure it actually works. 

John Koetsier: I love that you brought that up, Peggy, because it’s a different thing to be mobile and to be mobile-first, perhaps, in some areas of Africa. Because that might be, along with Asia and India, the place on the planet that is most mobile-centric, because mobile is the primary mode of computing versus in, perhaps, Western Europe or North America. We still have desktops, laptops, that sort of thing, in addition to our smartphones. 

So mobile doesn’t necessarily mean for you – what I’m hearing – doesn’t necessarily mean iOS, Android, and a full app experience. But as we see in places like Kenya and other places like that, mobile payments and mobile transactions and mobile communications in WhatsApp and other platforms is a key feature across Africa, correct? 

Beyers van der Merwe: Yeah. It’s a very good point. Absolutely, mobile is first. Desktop and any other platform for us is so small if you look at our numbers. It’s like 90% of our transactions, or of our engagements and visits, come from mobile phones. Mobile payments is critical, like it’s very different, but it’s almost that the customer has skipped certain phases and went straight onto a mobile phone as the device, as the platform to transact. And if you’re not there, you’re absolutely dead. 

Peggy Anne Salz: That’s a quote right there, John. 

John Koetsier: Yes. 

Peggy Anne Salz: You’re talking about mobile. Of course, part of that mobile experience can be VR, AR. Any plans, any embracing of Metaverse at PEP Stores? 

Beyers van der Merwe: It’s extremely exciting. I think for me as a CMO, I see a huge opportunity but it’s scary at the moment because it’s such a big thing. We were again laughing about it where we said that, imagine you go, if us now going into an exco meeting and saying, “We’ve decided that we’re actually going to buy this piece of land and it’s a Metaverse. And we’re actually going to create these avatars and add that whole new experience for a shopper on the Metaverse.” And they were going to buy… we can pay it with bitcoin or some cryptocurrency. And how weird it would be for a lot of people. But that is the reality. In five years from now, or not even five years, it’s going to be a huge topic for discussion in all boardrooms. I think it’s in some at the moment and I think our lives are going to change. 

But the important thing with Metaverse for me is you can’t take your current experience and try and put it onto a Metaverse. It needs to be a real customer experience. I think some brands are playing there at the moment. They’re getting it very wrong. Some are definitely doing it well, but you really have to have a strategy around what you’re doing in that space. 

So we’re not doing anything now at the moment but I’m not going to say never because I think that is a lot of what the future holds at the moment. 

John Koetsier: Let’s turn to another topic here. We’ve had MasterCard CMO Raja Rajamannar on our show, and he’s famously said that loyalty’s dead. Now you’re talking about different channels that you’re using, how your customers interact with you, how they buy when they come to your store, and moving at a pace of your customers. Do you agree that loyalty is dead? What do you take out of that statement? 

Beyers van der Merwe: Well, it’s quite a bold statement. I enjoyed it and I also enjoyed his session very much. I agree with him. First of all, I don’t think anyone owns a customer. We sometimes believe that we have loyal customers or people shopping with you more frequently, but it’s all about the product and the offering you put down. If something changes there, if they’ve got a bad experience with you, their last visit is how loyal they are. We sometimes think that we’ve tied them into loyalty programs; we put stuff down that for us feels like it’s a customer on a dashboard that we see a lot of and comes frequently. But I think it’s a massive risk for a business if you think that way. It’s everyone’s customer. 

The same with me. I shop at a certain retail store. If I go there and I don’t have a good experience or I’m disappointed in the product, I move on and I might go back. It depends if something changes again. But traditional… The way we see loyalty, or call a loyal customer, I support his view on it. I really think it’s the wrong thing to do if you think you own anyone. No one owns anyone. 

John Koetsier: Good point. 

Peggy Anne Salz: I do have to ask about how you’ve changed the experience because it’s also part of your rebrand, part of a campaign that’s ongoing – it’s not about selling. It’s about earning loyalty, earning interest through identifying with your audience and they want to, as you’ve nailed it, make an entrance. Tell me about that. 

Beyers van der Merwe: For us, it’s really about, like I said earlier, being customer-relevant and really understanding what the customer’s needs are, which also links into cultural segmentation, which I think is an amazing topic to discuss as well. Do you understand the cultural needs of your customer, and how they also moved through different phases culturally? “Make Your Entrance” was a campaign we did in December. Actually what happened is, it was really late in December already when we decided… We’re doing so many product and price ads, because that’s really what we do, and which come naturally. We advertise a product with a price on it.

But there was some heart missing in South Africa. After two years of COVID, people do want to get together and did want to get together. And it’s an important cultural insight that they want to make the entrance. So when you walk into a room, when you walk into a church, when you walk into a shopping center, you are dressed to impress. That is a key thing for our consumers. 

So we decided, let’s take that insight and actually create a fun campaign. It was really focused on digital content, so we created a lot of digital video content where it was having fun with how people make their entrance and some nuances around, you’re having a big Christmas lunch and then bringing back the Tupperware which is afterwards, after you’ve taken leftovers home from your mom’s house. It’s about that entrance you make when you come back or it’s about the entrance jumping into a swimming pool… just having fun. It worked so well. It performed extremely well. It was relevant to what the customers are asking for and they could all relate. We make sure, from a market point of view, we covered all segments of the market. We had some fun with it, and it’s really a campaign that we’re very proud of.

John Koetsier: That’s a great segue, actually, because I wanted to talk a little bit about how many different countries you operate in, but also probably how many different languages and cultural groups you serve. How many different countries do you operate in? How many languages do you have to transact business in? What are the challenges there, and how do you segment those customers and speak to each of them? 

Beyers van der Merwe: It’s 12 countries, and just in South Africa, there’s 11 languages. So that just gives you an idea. If you start adding it up, it is a lot. What we do as a business, we actually divide our Africa division as a separate entity to make sure that we… because you really have to be on the ground understanding the market. We put five countries into that bucket and then we have seven countries which is South Africa and the borders of South Africa that we look after. 

And yes, that’s an ongoing opportunity. I’m not going to call it a challenge. You have to make sure that you can communicate to customers in their mother tongue. And we can do that very well with radio in our country. We use the radio quite effectively to communicate in the customer’s language. Then wherever else we can do it like service in-store, of course, we do it as well. We go traditionally with English as the language we use. So yeah, it’s something that you can get wrong as well. If you get it right, it works very well. 

You also need the right partners. Of course, I don’t even speak all the languages, so you need the right partners to come in that know the countries, that know the languages, and again, know the customer nuances and key insights that you can pull on to have successful marketing campaigns. 

John Koetsier: Just relevant to that, I see a phrase behind you on – I’m not sure if it’s your left or right side because the camera might be flipping in here – but what is that phrase and what does that mean? 

Beyers van der Merwe: “Sikhula KunYe” is our culture. That’s our culture we have internally. It’s about “growing together.” That’s our internal business culture that we drive across all levels around growing. It’s really a good culture of growing. From the CEO straight down, we celebrate culture a lot in events. We dress up. We do funny things. We laugh at each other, so, yes, it’s quite a fun culture. 

John Koetsier: Thank you. 

Peggy Anne Salz: That’s something I want B-roll of, you know? 

We’ve talked about it several times as well, John. We were talking last time to Ian Stewart, for example, TOMS Shoes. He’s saying, “My problem is not the marketing. My problem is that I’ve got a bunch of ships off the coast with all my shoes in them and they’re not here.” How’s the global supply chain issue impacting you? How are you getting around that? And maybe also telling your customers, that’s a big point, to say, “Okay, it’s not here but trust me, it’s coming at some point.” 

Beyers van der Merwe: It’s a big thing. If you miss a season, you have winter products sitting in summer. You don’t want it, the customers don’t want it. So lots of challenges too on the shipping side. And yeah, it’s still there. 

I think that on the communication side, what can you do about it? Again, out of that, a lot of good has come where we had to implement posters or point-of-sale on our stores which is more agile to change. We will do a poster and we will leave a space where we can change a product or we can change price and find vehicles that’s more agile and produce TV ads at the last minute – even though we do them last-minute quite normally – but more last-minute, to make sure that you can change things because we had to communicate to customers the right product and we would rather take things off. 

So if the availability is not high enough, we would rather take the communication off for the customer rather than not communicate and disappoint customers because we invite them to our stores. We always say all communication is an invitation to say, “We have this product available. Come to our store.” We don’t want people to come in and be disappointed. Our communication strategy has changed to really be on the go, change as we go and really take all things that’s just not in store because you have disappointed people. 

John Koetsier: Let’s end here. You did a rebrand during COVID and you’re not the first one that we’ve heard doing that. Actually, you mentioned TOMS Shoes, Peggy.

Peggy Anne Salz: Yeah. 

John Koetsier: We talked to Ian, and he was doing a rebrand during COVID and it seems to have almost been a thing. But it had its challenges, I’m sure. Why did you do a rebrand during a global pandemic? 

Beyers van der Merwe: We definitely planned the rebrand or refresh. We didn’t plan the pandemic to happen. So…

John Koetsier: Okay, it wasn’t your fault. 

Beyers van der Merwe: It wasn’t our fault, no. So yeah, it was definitely planned before. The decision we had to make is, “Do we still continue?” I think that was quite a big discussion for us as a team and for me in my role to say, “Is this still the right time?” And I just believed it’s a better time than ever. So we had everything – mostly everything ready. And the customers asked for it. Like I said earlier, when the customers ask, when their eyes change, when their ears move, we have to go with it. They said to us, “It’s time to refresh. We really love you and there’s a lot of brand love, but we need you to put on a new jacket.” It was almost the words that they used. It’s like, “So, we want the same person. We want the same offering. We know what you stand for. Your positioning is clear, but it needs to be refreshed.” 

And until today, when we talk about it, we say, it was – definitely, it’s more than a logo change. It’s not a logo change. That was the end result of a lot of things in our business we put out to be ready, to actually signal change to our customers. It was an amazing process because I started off and we looked at various different routes where… extreme changes and it’s like walking on eggs. I said to the agency, “This brand is 55 years old. People love it. There’s so much good in it.” It’s like walking on eggs. You can’t get this one wrong because if you get it wrong, you’re going to upset a lot of customers.

And even in the process, because we involved customers in focus groups to make sure all the way along that we evolved the brand. It’s not a complete rebrand. We evolved it. We took them on the journey with it. I remember the day when we introduced it. It was introduced on social media first. And the one customer actually commented, and it’s like, “They didn’t ask me if they could change the logo.” That’s how much they really care about this brand. It was very well-received but there were still those things where I almost feel like they had to engage with me first, but it was a fun thing. 

Looking back, the timing was spot on. The world actually created opportunity for us in all of this and it did wonders for the brand. A really proud moment for PEP and for the marketing team who, like all online, we never saw, we never approved a logo on the table. Where that’s changed completely was signing off color proofs and making sure the colors are 100% correct. Most of it happened on a screen, so yeah, special time. 

John Koetsier: Well, wonderful. Glad that that worked out for you and that it made sense and then it resonated with your audience. I love that: “They didn’t ask me if they could change the logo.” That’s some loyalty right there. That’s some ownership of the brand. That makes a lot of sense. Beyers, we want to thank you for your time. We do appreciate it. 

Beyers van der Merwe: Awesome. Thank you very much for having me. It was fantastic. 

Peggy Anne Salz: I want to thank you as well. Also for sharing these insights into cultural segmentation. I think that’s something we’ll be hearing a lot more about, John. Demographics, that’s location. If we’re not out, how are you going to address us, engage us, target us? It’s interesting to focus on what we value instead of where we are. So thank you for sharing. 

John Koetsier: And for everybody else, for our audience, if you’re watching the video, hey, check out the audio podcast which is great if you’re in the bus or on a train or on a plane – if you’re doing those things yet now still, who knows, or starting them up again. And if you’re on the audio version, guess what? You can see us and it’s amazing. It’s almost like Metaverse Lite. You can search for us on YouTube, chill and watch us whenever you want. I mean, take out the popcorn, there you go. 

Peggy Anne Salz: And if you want to make it complete, you join us, John, because this podcast is all about finding the world’s best marketers. Getting their top tips, advice. If you fit the bill, well then DM John or me on Twitter or LinkedIn. Yes, we are there. And let’s get you set up with a show of your own. 

Until then, this is Peggy Ann Salz. 

John Koetsier: And this is John Koetsier for CleverTap Engage.

 

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Posted on March 29, 2022



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