Pick n Pay’s dismal results are a reality check, says returning CEO Sean Summers
Back after 16 years, Pick n Pay CEO Sean Summers is confident he can put the ailing retailer back on track. Retired CEO Sean Summers has stated that Pick n Pay's poor performance, reflecting a 97.5% drop in trading profit over the past six months, is a reality check for the retailer. Despite this, Summers believes that retail is not rocket science and that the retailer has fallen out of love with its customers, its people, and suppliers. The group recorded a trading profit of just R31.8-million in the half-year to 27 August, before tax and other deductions, including abnormal costs and supply chain duplication, resulting in a loss of R837.2-million. The company has lost 55% of its value since the beginning of 2023 and is down 60.57% since 2018.
Publicados : 2 anos atrás por Georgina Crouth no Business
It’s going to take at least 18 months to get Pick n Pay back on track, and it’s going to take a massive effort, but returning CEO Sean Summers is confident that it can be done, because retail, after all, is not rocket science.
Summers, who started his career at Pick n Pay in 1974, says the retailer’s latest results – reflecting the tanking of trading profit by 97.5% over the past six months – were a reality check.
“The truth is, Pick n Pay has fallen out of love with its customers, its people and its suppliers. This is what lies ahead of us. This is why it’s so exciting. Because from here, we go up,” he told investors at Wednesday’s results announcement.
As Nietzsche once observed, when you’re staring into the abyss, the abyss stares back at you. And Pick n Pay’s results are truly abysmal; its turnover might have grown by 5.4%, but the group recorded a trading profit of just R31.8-million in the half-year to 27 August – before tax and other deductions, including abnormal costs and supply chain duplication – ending up with a loss of R837.2-million.
The group has lost 55% of its value since the beginning of 2023 and is down 60.57% since 2018.
It wasn’t all terrible, though, as Boxer South Africa delivered an exceptional performance, growing by 16.1%.
Other highlights included online sales – which grew by 76.3% – value-added services, and keeping a lid on internal inflation, which the group kept at 8.3%, well below CPI Food of 11.4% for the period.
Summers told investors that the more things changed in life, the more they stayed the same.
“I was born in Cape Town in 1953 … My mother used to provision the home and she picked up that old telephone … to order groceries. A few hours later, the fellow would arrive on a bicycle and bring the groceries to the house. There weren’t any supermarkets in those days.
“What has changed? So the internet has replaced that phone; the Pick n Pay asap! The scooter has replaced the bicycle. But people aren’t eating six times a day because of the internet.”
The fundamentals of retail remain the same, he said.
“The thing that pleases me so much is that we, to a degree, almost taught those people in Brackenfell [Shoprite-Checkers]”, referring to a comprehensive Pick n Pay brand overhaul in the late 1990s, which encompassed store refurbishments that included a “march to fresh foods” and theatres of food, which entailed putting more fresh foods on the floor and opening up the delis, the bakeries and the cheese shop.
Pick n Pay was voted the world’s best retailer in 2009, beating Abercrombie & Fitch to the top spot at the National Retail Federation’s annual convention in New York. The award is presented to retailers that achieve a global reputation for excellence.
Once, Pick n Pay had a real love and a passion for people and the business, he said. And they can do it again, Summers added. He said that Shoprite – now the darling of the market – has simply taken Pick n Pay’s playbook and thrown it back at them.
Summers told Daily Maverick that Pick n Pay has been under duress for decades; a decline of this nature doesn’t happen overnight.
“You can feel it as a consumer going into the store; you can feel that the variety is not there. The product is not quite what it once was. Staff are not as happy with their work … there’s too much chit-chat. People are not really engaged. These are things that happen over time.”
Staff retrenchments under his predecessors played a big role in eroding the soul of the company – its people – he admits, saying management needs to find the key to unlocking hearts again because there is no fundamental difference between retailers.
It was also time to rethink the group’s Ekuseni (“New Dawn”) strategic plan, which split focus from the Pick n Pay core brand, into asap!, QualiSave, Clothing and Boxer, focusing on the lower-income market.
“I think that the execution of that strategy, again, needs to be revisited and we need to have a look at why we are not getting the return yet that we set about getting.”
Pick n Pay has lost many good people over the years, he said, and they needed to figure out what the appropriate structure is to run a thriving retail business.
For now, the group will conduct an audit of existing talent and make strategic appointments.
“Obviously, part of my remit in the company has to do with succession. So it’s a case of stabilising the current business, getting it pointed in the right direction, and then working out who the leadership team is going to be in the next five to 15 years.” DM
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