Pick ‘n Pay: A sustainable eye on the future of retail

Whilst the economic decline continues to hit the customer in the pocket, there will always be a demand for grocery provisions. That was a point borne out by a recent statement made by Pick n Pay that it expected its latest financial results to indicate higher annual turnover.

PnP01In early April the company stated that it was set to post an improved financial performance for the full year, with annual growth in turnover of 7.7 per cent on a comparable 364-day basis with 2013.

At a time when household spending is stinted by escalating costs, the retail sector in general has felt the brunt of the downturn with many South African retailers indicating a slowdown in consumer spending. Indeed it was reported that last August Pick n Pay was looking to shed jobs as part of a retrenchment drive – necessary to reposition the business and maintain its sustainability in a changing market. The results indicate that the move has been successful:

“The group’s improved financial performance reflects in large measure the encouraging progress over the past year in reducing cost through greater organisational and operational efficiency, and stronger financial control across the business,” Richard Brasher, CE stated.

Pick n Pay is in the midst of a turnaround‚ having lost market share to rivals over the past few years as it struggled to implement changes to its information technology and distribution networks‚ while battling high costs. It is the latest challenge for a business with a long history of success in South Africa and beyond.

Pick n Pay Holdings Limited and Pick n Pay Stores Limited are investment holding companies which have been listed on the JSE since 1968. Pick n Pay Holdings Limited’s sole purpose is the holding of the controlling shareholding in Pick n Pay Stores Limited. Pick n Pay Stores Limited, through its subsidiaries and associates, operates in the retail sector on the African Continent.

The company website describes the business as follows:

“Pick n Pay is the quintessential family store focused on the customer. Since 1967 when consumer champion Raymond Ackerman purchased the first few stores, the Ackerman family’s vision has grown and expanded to now encompass stores in South Africa, Namibia, Botswana, Zambia, Mozambique, Mauritius, Swaziland and Lesotho.

“Additionally Pick n Pay owns a 49 per cent share of a Zimbabwean supermarket business, TM Supermarkets. Our offer to customers focuses on groceries, clothing and general merchandise, but also includes additional value-added services to cater for our customers’ expectations and evolving needs. To ensure a convenient and accessible shopping experience the Group operates across multiple store formats, both franchised and owned.

“For the past 5 years the Group’s core focus has been to strengthen its strong South African retail businesses under the Pick n Pay and Boxer brands, while adopting a systematic approach to expanding into adjacent areas, including geographical growth through the African continent.

“As a major retailer in Africa, the Group strives to address socio-economic challenges through the supply of high-quality, affordable food for all customers, while providing significant employment and economic opportunities across its value chain. The growth and success of Pick n Pay is attributable to 3 basic principles, which form the cornerstone of the business: Consumer sovereignty; Doing good is good business; and maximising business efficiency.”

Of course doing good business requires a well thought-out operational strategy and over the last year Pick n Pay has focused upon the centralisation of its buying, operational and finance support functions. This “necessitated” an impairment of certain intangible assets, which would be reflected in the forthcoming yearly financial results.

“Our strategic focus remains that of customer-driven and sales-led growth, with progress on efficiency and expense control enabling us to invest in the shopping trip and deliver a consistently excellent customer experience,” Brasher emphasized.

The company’s approach has of course led to a plethora of awards, with 2013 delivering an impressive haul which included: South Africa’s Number 1 Grocery Store – Sunday Times Top Brands; Best Supermarket – The Star Readers Choice Awards 2013; Best Customer Service Received – The Star Readers Choice Awards 2013; Best Customer Loyalty Programme – Sunday Times Top Brands; and Most reputable retailer in SA – 2013 RepTrak Pulse Survey.
Sustainability remains a key driver to the ongoing success of the group and in March, Suzanne Ackerman-Berman, Director of Transformation at Pick n Pay, addressed this issue at a Cape Town event forming part of Fairtrade Week 2014:

“As consumer’s awareness of sustainability increases, there is a greater responsibility on corporate SA to source products ethically and to ensure they are produced in a social and environmentally friendly manner. We need to find ways to meet the needs of the present, without compromising the ability of future generations to address their demands in terms of the environment, the economy and their social well-being,” she stated.

Ackerman-Berman was responding to new research funded by the Belgian Technical Cooperation (BTC) in association with Fairtrade Label South Africa, in which approximately 65 per cent of respondents revealed no awareness of sustainability, while 75 per cent of respondents showed no awareness of sustainable and ethical products.

Ackerman-Berman says industry leaders have a responsibility to lead the way in terms of addressing the broader sustainability needs in South Africa. She points to the importance of mentorship in unlocking future economic growth. “Mentorship and access to skills and markets is the greatest asset that we as established businesses can share with small emerging entrepreneurs and farmers. It’s about helping small business understand the importance of ethics in business, how to accept change and to adapt to the unexpected so that they can thrive in any competitive market.”

Pick n Pay was the first retailer in Africa to commit to Fairtrade, and to give its assurance that it would stock Fairtrade products as they become available locally. “When we signed the agreement with Fairtrade in 2010, we committed ourselves to becoming a key player in the creation of a Fairtrade market in South Africa, as well as in the promotion of new local and regional Fairtrade supply chains. Our commitment in 2014 remains as strong as it was then,” Ackerman-Berman affirmed.

Pick n Pay is also a Fairtrade at Work partner, which means the retailer has committed to using Fairtrade products in their working environment too.

The company’s Transformation division has through the Ackerman Pick n Pay Foundation and Small Business Incubator been able to encourage and assist small businesses and small farmers to become sustainable suppliers to the retail industry.

In 2013 Pick n Pay was recognised as the only retailer to be included in the Climate Performance Leadership Index (CPLI) and the top retailer in the Disclosure and Performance band of the Consumer Staples category of The Carbon Disclosure Project.

The retail chain has worked hard as it approaches its fiftieth anniversary in 2017 and very much has an eye on the future.