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Send  Share  RSS  Twitter  23 Nov 2009

RETAILING: Ackerman Empire Re-Shuffled


Recent Western Cape Business News

THE retirement of Raymond Ackerman as the chairman of retail giant Pick n Pay was – albeit partially expected – not announced at the best of times for the supermarket giant.

After being the undisputed king of the SA supermarkets for so long, Pick n Pay can now definitely feel Whitey Basson’s ever improving Shoprite Holdings breathing hotly down its neck.

The world of retail itself is not only suffering from curtailed consumer spending in these tough times, but there is a pending investigation into food prices to contend with as well.

Perhaps there is something to be taken from the fact that the 79 year old Ackerman – who remains intensely passionate about Pick n Pay – has chosen this juncture to step away. Surely he must feel confident in his brand and his management team?

It must be pointed out, though, that while Ackerman steps into the background - taking on roles as an advisor and corporate ambassador - the truth is that the Ackerman family still retains a firm grip on Claremont-based Pick n Pay.

In spite of holding an interest of less than 30% in Pick n Pay Stores, the Ackerman’s retain outright control via a 48% stake in pyramid holding company Pikwik (Pick n Pay Holdings).

The board changes that followed Ackerman’s retirement suggest the family remain doggedly determined to retain the control position.

Ackerman recently reiterated that Pick n Pay was unashamedly a family controlled - but professionally managed – company.

I believe this has been a core strength of the company and has always allowed us – to the benefit of all Pick n Pay – to take a long term view of the company instead of focusing on immediate- or- short-term returns.”

One can’t argue this point. A shareholder who put just R100 into the business on listing in 1968 would today have just about R1 million - a compound annual growth of over 25%.

Ackerman also stresses that being family controlled has also ensured that the values introduced in 1967 have carried through over 42 years. “Importantly, this will not change.”

If one looks at Remgro, the Stellenbosch-based industrial conglomerate that also created heaps of value for investors over the decades, the family legacy is a critical one. Although Remgro chairman Johann Rupert has a vastly different executive style to his late (great) father, Anton, it is Rupert snr’s legacy that still looms large over the company.

The legacy of Ackerman, who CBN believes will still go to the office most days, will probably prove every bit as enduring. Certainly there will still be enough family members in the boardroom to ensure family instilled values remain at the forefront of the business.

Ackerman’s son and daughter Jonathan Ackerman and Suzanne Ackerman-Berman - currently alternate directors on the Pick n Pay Stores board - become full time directors. They replace their mom (Wendy) and dad.

Ackerman’s eldest son, Gareth, then vacates the chairmanship of Pikwik (and will be replaced by Ackerman snr as an interim measure) with Jonathan and Suzanne appointed alternate directors on the Pikwik board to Wendy and Raymond.

The most significant re-shuffle of family board members is that Gareth (52) becomes the chairman of Pick n Pay Stores. Gareth, however, is listed as a non-executive chairman, whereas Raymond served as executive chairman.

The change is understandable as new corporate governance regulations recommend that the chair of a listed company preferably fulfil a non-executive role.

CBN reckons the appointment of Gareth Ackerman signals a subtle but significant change in Pick n Pay’s executive functioning.

Raymond Ackerman was certainly a hands-on chairman (in every sense of the word), and in latter years may well have been thought of as a slightly over-bearing paternal influence in the boardroom. One, of course, can forgive him for being passionate…the man built up one of the most profitable retail enterprises in the world.

Gareth Ackerman, on the other hand, is less the ‘retail man’. Gut feel is that he will let his senior management do their jobs…

Although Gareth has worked his way through the ranks at Pick n Pay he is not considered, by any means, a grocery guru.

Gareth’s shot at glory came in the late nineties when he headed the specially created Group Enterprises businesses – which looked after all the group’s other interests outside the Pick n Pay supermarkets. At this time Gareth held the title of joint MD for Pick n Pay.

While the eloquent Gareth was clearly a lot less gung-ho than his father, he seemed to cope well with the not insubstantial responsibilities of diversifying Pick n Pay’s retail reach.

Some things did not work…like the proposed link up with George Hadjidakis’ 7-Eleven. And, perhaps more significantly, Group Enterprises never pulled off a big deal.

In any event Sean Summers was appointed to replace Raymond Ackerman as CEO, and Gareth was shuffled along into Pikwik to look after the Ackerman family interests. Nick Badminton has since replaced Summers, and appears to be making good headway in reinvigorating Pick n Pay.

This has been confirmed by Ackerman snr, who said the R50 billion a year company has done some incredible forward planning under Badminton. “The strategic direction taken by the company has resulted in a five year plan that is both remarkable and very confident.”

Badminton is overseeing critical developments like the rollout of the company’s SAP technology, a move to centralised distribution, the franchise conversions (aimed at producing new black ownership) as well as the rollout of the new Pick n Pay brand.

Ackerman noted that Gareth had spent most of his life with Pick n Pay in numerous positions – ranging from buying to store management and running Pick n Pay’s butchery division.

Ackerman said Gareth had done a quiet, but formidable job at the helm of Pikwik as well as in running the Ackerman Family’s office and investment funds.

While Gareth has perhaps cultivated an image of the ‘quiet one’, he is well versed in the ways of business – and he brings both an external and global perspective to the role of chairman.

He has undertaken consulting and doing corporate finance work as well as lectured on international platforms as an Associate Fellow at the Said Business School at the University of Oxford. Gareth has also played a leadership role in the global Consumer Goods Forum.

Gareth Ackerman says after a lifetime of preparation, he is looking forward to taking the reins of the company.

My father changed the face of retail in South Africa and that is the legacy that will always be present at Pick n Pay. The challenge ahead of me is overseeing the operations of a company by working with and through the excellent management team headed by Nick Badminton.”

In CBN’s opinion a critical matter that needs to be addressed quickly is Pick n Pay’s all important trading margin, which in the interim period to end August slipped down to 2.8%

That means for every R100 in sales Pick ‘n Pay brings in R2.80c in profits.

While Ackerman snr never seemed keen to compromise Pick n Pay’s reputation as SA’s leading price discounter, there may be other executives who reckon the company – which has upgraded so many of its stores – should be able to fatten up the margin.

Judging by the umbrage Pick n Pay took to rival Shoprite’s recent claims to be the market share leader, perhaps the margin issue will not be on the immediate agenda. And with a food price probe pending there may well be good reason to shred the margin a little more…

Good luck Gareth!


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