In 1955, Gustav Gottschalk decided to sell his store called the Bargain Shop in Upington, due to his advanced years.
The store dealt in second-hand furniture, clothing, shoes, medicine, food, bicycles and even donkey carts. He ran the store profitably for many years alongside the help of his assistant, Piet Strauss.
He then sold the store to Gawie Esterhuyzen, who was a partner in a legal firm in the area, and also handled some of his legal affairs.
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Esterhuyzen approached Renier van Rooyen to help him run the store on a part-time basis. Part of the deal was that they both contribute capital to the venture, Renier added £400, while Esterhuyzen forked out £300 – the balance of £800 had to be paid over time.
The following 2 months, Renier spent his weekends at the store under the guidance of Gottschalk, to learn all the tricks of the business, as he had no experience of how to run a shop.
When Gustav finally left, Renier was fortunate enough to keep the skills and experience of Gustav’s assistant, Piet Strauss, and the latter soon became a friend and his right hand in the running of the business.
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Renier became involved full-time and began his magic by restructuring the nature of the store.
- The trading space was enlarged to about 170m² by leasing two more rooms in the small building in Brug Street.
- The stock composition was changed from Gustav’s wide selection to largely low priced clothing.
- Elimination of credit sales.
The business started showing signs of growth in sales and profit during the next few months. Renier then enlisted the part-time help of Kotie and Elof Alice, with Esterhuyzen working on Saturdays.
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After realizing there was an unexploited market for what the store was selling, it became clear to Renier that it was indeed a viable business.
In late 1956, Renier ended his partnership with Esterhuyzen by buying out his share of the business for £1 800. The two remained good friends, and Esterhuyzen continued with his legal practice in the area.
Having full ownership meant Renier had to now take care of virtually every aspect of his fledgling business by himself, with the most important being the purchasing of stock.
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This required him to drive once or more times per month to Cape Town, where he bought enough stock to fill in his vehicle, and then drive back to Upington the same day to have the stock on the shelves the very next day.
In those days, there weren’t any proper roads between Cape Town and Upington, it took Reiner atleast 10 hours to complete the journey one way.
In 1957, he converted his store into a private company called Bargain Stores, which was the holding company. He continued to experiment with different prices, products, and methods of promotion.
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By then he had formulated his business idea, and although he couldn’t express it in words at that time, he knew that the only way he could sell clothing effectively and profitably, was to be cheaper than any other business.
In early 1959, Renier opened another store in Upington called Upington Volksklere. He wanted to use the new store for a year in order to experiment with selling discounted clothing. By the end of 1959, he developed an identity for his business and also established a successful marketing strategy.
In 1960, he amalgamated the two stores as subsidiaries under a holding company called BG Bazaars, and moved to a larger premise in Upington’s CBD, with a small warehouse.
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With the business blossoming, Renier decided to increase his personnel by hiring his family members including his sister(Baba), brother(Gert), his wife(Nella), and others. He also started to expand the business beyond Upington, by launching stores in areas of the Western and Northern Cape.
As an experiment, he introduced an innovative concept of self-service into his stores, as opposed to being served by someone from behind a counter. This enabled customers to touch the clothes, and try them on in the dressing room.
By the mid-1960s, the 4 BG Bazaars stores were turning out a healthy profit and Renier’s intention was to open at least 10 stores in towns like Prieska, Kimberley, Postmastburg, Vredendal, Moreesburg, Calvina, Malmesbury, and Paarl – these towns were mostly in a defined geographical area between Upington and Cape Town on the route of his frequent travel to Cape Town.
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BG Bazaar’s successful business principles were based on good quality clothing, blankets, and shoes at very low prices – with low overheads, and friendly personal service.
The stores were neither fashion houses nor flashy – just plain value for money, big volumes and low margins, similar in philosophy to giants like Wal-Mart, the biggest retailer in the world.
By 1965, the van Rooyen family were financially independent and relatively well-off. Renier wanted to expand the business even further, but realized that further expansion would require more capital and resources that his family couldn’t provide.
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The success of the business brought forward numerous people with offers to invest their money into the business.
At this point, Renier decided to run with an unusual policy which attempted to link investors and employees. People who wanted to invest had to be prepared to work actively in the business, and similarly, those who worked for him also had to invest in the group.
As you’d expect, this policy didn’t stick with most of the potential investors. Many backed out, and he ended up raising only R50 000 of the planned R250 000.
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“Unfortunately, some of the men with the biggest mouths got cold feet and some of the big money talkers were without substance.”
Reiner explaining why many investors pulled out
At the age of 33, Reiner undertook the next step in his career, founding Pep Stores in 1965.
He already had 10 years of invaluable experience in retail. He firmly believed in his own abilities, and the direction which he was going to take. In addition, he was convinced that with the help of his family, friends, and employees, he would succeed.
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By this time, he had already established the foundations for his company’s future success. Through years of experimentation, he developed an effective recipe which had all the trademarks of having been conceived on the shop floor.
It was a product of thousands of transactions with many customers, sensing their basic needs as paying consumers, their desire to get better value for their money, and to be treated like human beings.
There was nothing really magical about this recipe, it was based on narrowly focusing on a niche market, the recipe included these following basic components:
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- Higher turnover, lower profits.
- Selling goods which meet the requirements of customers.
- Offering a new kind of shopping experience to customers – better value for less money in a friendly, pleasant and enthusiastic environment.
- Merchandise in the lower and popular ranges.
- Staff training as an investment rather than expense.
- Low rental, low prices, low advertising costs, self-service, mass display in shops, open display in windows.
Having established a sound foundation for further expansion, Renier then created a separate company which was to incorporate the existing stores.
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He wanted to retain ‘BG Bazaars’ as the name of the new company, but after a brainstorming session with John Lee, it was decided to use the name of Pep Stores.
Pep Stores was launched in 1965 and in September of that year, it took over B.G. Bazaars in De Aar, which officially became the first Pep Stores shop.
Two Pep branches were opened in Kimberly and Postmastburg in December, while the remaining BG Bazaars branches continued to operate independently. In 1969, they were incorporated under the Pep banner.
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Due to Upington’s modest size and relative isolation from the country’s main urban areas, it became clear to Renier that the town wouldn’t be a suitable choice for the new company’s headquarters.
In 1966, Renier took his family and hit the long dusty road to Cape Town by his car, to risk everything on a business venture in a different city. When they got to Cape Town, they settled in the northern suburb of Bellville.
The first 5 months of Pep’s existence was characterized by a small financial loss, but after obtaining credit with some suppliers, the financial situation improved, resulting in R10 000 profit and a 600% rise in turnover by February 1967.
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By then, the number of Pep Stores had increased to 10. In late 1967, the company took possession of its newly-built headoffice and warehouse in Kuilsrivier.
During that time, Christo Wiese, who worked at Pep during his University holidays, joined the company on a full-time basis as the secretary, and Renier’s second in command. Christo’s job included finding premises around the country for new stores, and was also responsible for recruiting staff.
By 1968, the number stores increased to 29, with an average turnover of R79 000 per store.
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Pep’s rapid expansion necessitated new technology, and in 1969, the company received credit to acquire brand new cash registers worth R500 000. By the end of February 1970, sales increased by 130% to R6.6 million, with profits sitting at 268%.
Renier van Rooyen laid the groundwork for the next phase in Pep Stores’ evolution, focused on fine tuning the methods and practices and creating the Pep identity.
In the following years:
- Reiner hired Whitey Basson as a financial director to help Pep list on JSE.
- Basson later became head of operations at Pep.
- Basson then bought 8 small grocery stores in the Western Cape called Shoprite, which became a subsidiary of Pep. Shoprite went on to unbundle from Pep, and become the leading food retailer in the African continent.
- Christo Wiese bought out Reiner’s stake in Pep to become the majority shareholder.
- Under Wiese stewardship, Pep(trading as Pepkor) went on to launch and acquire these companies below:
- Operate 2 470 stores in 11 African countries, while employing 17000 employees.
- In 2014, Christo made the biggest mistake ever by selling Pepkor to Steinhoff International for about 20% of Steinhoff’s issued shares.
- In 2017, Markus Jooste, then CEO of Steinhoff International, was alleged to have committed fraud which plunged the company’s shares by 90%.
- The case is still ongoing today, with Pep caught in the crossfire
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