By 1970 Pep’s rapid growth
and impressive results led to Pep being named by Business South Africa as South
Africa’s largest and fastest-growing clothing retailing organization, while South Africa’s largest newspaper, Sunday
Times, described the matric-educated 38-year old Renier as ‘having that
Harvard look’. There was
also growing corporate and investor interest in the company. In 1969 the giant
Edgars Stores entered into negotiations with Renier to buy Pep for a R4
million, an attractive offer at the time. After proper consideration and consultation,
he rejected the offer on the grounds that Pep’s shareholder/employees - who,
together with the directors owned 90 per cent of the company’s 3.4 million
issued shares - clearly indicated that they preferred to be working as an
independent entity rather than as part of a bigger organization.
By 1970
Pep’s rapid pace of growth required Renier to install computers (still a newish
concept at the time) in its headquarters in Kuilsrivier to help ease the
administrative burden of keeping record of six million sales transactions per
year. These computers were huge and took up several large offices and many
staff, but quickly paid off in increased efficiency. During that year the
number of stores increased to 114, but now the expansion focused more outside
of Pep’s original geographical base in the Cape, to the provinces of Transvaal,
Free State and Natal (as these were known up to 1994). The enthusiasm with
which Pep was received wherever it opened a new store was repeated in the
northern provinces, as was evident from the fact that in many instances, the
police had to help control the thousands of shoppers who were jostling to pick
up bargains on opening days - men’s trousers for 99c, ladies shoes for 99c,
baby shoes at 5c and handkerchiefs at 1c a piece. In Bloemfontein 4,000 people
broke the glass door of the new Pep shop and had to restrained by 15 policemen
– broken shop windows due to overenthusiastic shoppers was a frequent
occurrence and almost viewed as part of marketing costs.
Rapid
expansion, however, was a costly business and necessitated more capital. To
address this ongoing problem Pep announced in August 1971 that it was issuing
350,000 shares in a private placement. Encouraged by the huge
interest shown in this private placement and buoyed by a 100% increase in
turnover during the first five months of the 1971 financial year, Pep Stores applied for a listing on the
Johannesburg Stock Exchange by 1972.
In 1971 a huge fire caused by suspected electrical short circuit
swept through the main warehouse and headquarters of Pep Stores in Kuilsrivier,
destroying goods estimated at about R1 million (in 2010 terms, approximately
R100m). Although
the immediate psychological impact of the fire on Pep’ staff was considerable,
it was buffered by Renier’s calm demeanor and him posture of being in total
command of the crisis even when the flames were towering up to 100 meters
above ground level. One of the Pep
employees, Pietro Tito, a manager of the Stiletto factory, recalled seeing
Renier late at night, with his eyes red from the smoke, standing in the ruins
but already busy planning the reconstruction of the warehouse. In spite of the damage and
destruction, it soon was business as usual and the financial impact on Pep as a
whole was not too serious. Fortunately, the building and the stock were fully
insured and Pep’s insurance claim was deftly handled by the newly-appointed
appointed financial director, Whitey Basson. The
relatively minor effect of the fire on Pep’s business activities and the ease
with which Pep recovered from this temporary setback were evident from the
results for the year ending February 1972 - in spite of the disruption the
company managed to double its turnover to R22 million, increase its pretax
profit to R1,4 million and earnings per share by 52 percent.
With Pep’s market segmented
at the time into 30 per cent white, 40 per cent coloured and only 27 per cent
black, and with more than half its stores located in the Cape, it became
obvious that the company had hardly scratched the surface of the much greater
populated and economically stronger northern provinces where the vast majority
of South Africa’s black population resided. With a sound management team (newly
appointed to the board of directors were Tom Ball, Basil Basil Wyers, and
alternately, Whitey Basson and Frank Weetman) and supported by 3,500 loyal and
enthusiastic employees (many with shares in the firm, except coloured and
blacks who were not allowed by law to hold shares), Pep Stores was
exceptionally well- placed for further expansion and for its listing on the
Johannesburg Stock Exchange on 7 June 1972.
IRenier described Pep Stores successful marketing philosophy as follows: Pep’s target market was the "working lower income
people of South Africa, who, as individuals, had little money to spend, but
collectively possessed an enormous purchasing power". The sales
philosophy was summarized as: ‘We do not sell cheap goods - we sell goods cheaply. We don’t sell rubbish - at a given price our wares are of a good
quality, a fact realized by our customers -
poor people are not stupid - they cannot afford to be".
IRenier described Pep Stores successful marketing philosophy as follows: Pep’s target market was the "working lower income
people of South Africa, who, as individuals, had little money to spend, but
collectively possessed an enormous purchasing power". The sales
philosophy was summarized as: ‘We do not sell cheap goods - we sell goods cheaply. We don’t sell rubbish - at a given price our wares are of a good
quality, a fact realized by our customers -
poor people are not stupid - they cannot afford to be".