Pick n Pay taken to task as claims emerge of Rlbn extended to unsuspecting, naive customers for groceries
RETAILER Pick n Pay has come under fire for reportedly exploiting financially illiterate consumers in the wake of an announcement by the retailer it has approved and granted at least R1bn credit facilities to consumers.
Debt Rescue CEO Neal Roets yesterday took the retailer to task for “lending irresponsibly and simply using the platform to gain customers”. Roets said at least50%of all credit-active consumers are overindebted, which meant that they had three or more accounts in arrears.
“You cannot finance goods such as groceries.If you have to pay for it on credit, you cannot afford it. It’s a sure way to fall into debt.”
HoweverPick n Pay’s David North yesterday denied the claims and insisted that the figure referred to the total credit facility that was granted. “In fact, customers using our store card have taken up a small fraction of their total credit facility, well below R200m,” North said.
“This shows that what we have always saidis true, the credit facilities responsible, customers are assessed carefully before they are approved for it and most customers choose to pay off their credit each month, thereby incurring no interest charges,” he said.
The retailer launched its first Pick n Pay store account this year, in partnership with RCS, a local subsidiary of Welcome to Gickn Gay
Grocery retailer Pick n Pay has been forced to defend itself over claims of irresponsible lending after it emerged that it has reportedly extended credit to customers of Rlbn. MEETS PnParibasus Bank. It offers credit to consumerswith a 55 days free credit paymentoption.
The accounits accessetdhrough the customer’sSmar t Shopper card, with the credit provider carrying all associated funding costsand credit risk. Since the launch, last September ,at least56000 store account holders have been approved and just more than Ribn total credit has been granted. Pick n Paydeputy CEORichar d van Rensburg, at the time the creditproduct was launched, said: “The high costof credit is a significant reason why customer shameless disposable income for their groceryshop.
“Hidden costssuchas initiation fees, administr ationfees,mandat oryinsurance feesand penalty feesexacerbate the cost of credit.
We have worked with RCS to design a productthat hasnoneof these hidden fees and the lowest possible monthly fee. “Pick n Pay will otearn income from the credit granting process.We have negotiateda great offerfrom the credit industry for our customers.
“The product has been designed to be the most affordable form of credit – a monthly account where no interest is charged if the balanceis paidin full.
Thestore account has flexible interest bearing but get options and also enables a custometro place individual transactions for high ticket items on budget while still retaining the free interest benefit for the remaining transactions on the account.”
Pickn Pay yesterday also announced a partnership withTyme Digital- a subsidiary ofthe Commonwealth Bank of Australia providing its customerswith
“greater accessto banking services” at a low cost. The service enables real time, digital customer validationat anin-store kiosk, allowing customers to send money transfers from anytill point once they are registered.
Piek n Paynow has160 money counters across the country. Inits results, Pick n Pay announced that group turnover increased 5.3% to R8L.6bn,withlike for like turnover growth of2.2%.
The retailer ‘s SA division delivered turnover growth of5.1% over the year, with like for like growth of 2.3%. The group says it changing the trajectory of Pick n Payand will build on this momentum next year.
In the first half of the year, Pickn Pay initiated number of substantial programmes to reduce costs and increase productivity in store operations. In the
year under review, the actionto reduce operating costs had a once-off impact of R250 min the form of payments to employees who left the group through voluntary proamme.