All data are collected in the Fiscal Year of 2008-2009.

South Africa / Distribution, Retail

Founded in 1967 as a family controlled business with four small stores in the Western Cape, Pick n Pay listed on the JSE the following year. Pick n Pay Group is managed through three divisions; each with their own management boards: Pick n Pay Retail Division; the Group Enterprises Division; and Franklins Australia. It has a total of 782 stores in 2009, including 82 stores in Australia.

The founder of the chain is Harry Goldin. Raymond Ackerman purchased the small chain of supermarkets from Goldin, and went on to develop Pick n Pay into South Africa's largest supermarket group. Ackerman is still the chairperson of the group. He is also well known for his philanthropic activities.

Pick n Pay is working on a black economic empowerment (BEE) equity transaction, which would give some of the company's employees a piece of the company at the end of 2010.

Cape Town: 101 Rosmead Avenue, Kenilworth, Cape Town; Tel: (021) 658 1000

Johannesburg: 2 Allum Road, Kensington; Tel: (011) 856 7000

The Retail Division, which focuses on Pick n Pay's core business, comprises Hypermarkets, Supermarkets, Family Franchise stores, Butcheries and Financial Services.

The company concentrates on food, clothing and general merchandise. Hypermarkets represent the largest store format, with a total of 20 outlets throughout the country. Each Pick n Pay Hypermarket is a model of one-stop discount retailer, featuring an effective mix of foods and general merchandise. Pick n Pay's 162 Supermarkets countrywide is smaller and focuses on fresh food where Fresh Food Markets are situated in the larger stores.

Superstores were developed as a store format that bridged Supermarkets and Hypermarkets, with the first store opening in 1980. In 1998 they were re-categorised as Supermarkets and incorporated into the relevant Supermarket Regions.

Pick n Pay Family stores represent the company's first venture into a franchise operation. Owner-managers run the stores with sourcing and operational support from Pick n Pay.

Family stores, which fall under the control of the company's Retail Division, have allowed Pick n Pay to extend its reach to smaller convenience locations with longer opening hours.

In 2002 Pick n Pay purchased the Boxer chain, which is a low cost, low margin operation concentrating primarily on retailing merchandise to South Africa's rural market.

36,541 employees

In 2009 the group's total market share grew to 33.4 percent against Shoprite's 28.4 percent, Spar's 26.3 percent and Woolworths' 11.9 percent.

“To introduce greater operating efficiencies (including centralised distribution) and build world-class retail capabilities”

“The growth and success of Pick 'n Pay is attributed to two fundamental principles: an unwavering belief in consumer sovereignty; and the application of the "four legs of the table" principle. These principles were put into practice at foundation, and continue to be the cornerstone of our business. We believe that in our application of these fundamentals, we are in effect preparing ourselves for sustainability. The "four legs of the table" principle follows a simple analogy. The business is a table supported by four legs on top of which the consumer sites. Each leg needs to be equally strong in order for the table to remain balanced and upright. The four legs of the table are: administration, merchandise, promotion and social responsibility; and people.

‘’Our success is based on seven enduring principles: consumer sovereignty; a flat organisational structure; maximizing decentralisation of authority to enable local control; promoting from within, recruiting from outside only as an exception when specialist skills are required; maintaining a discount image; fighting collusion amongst suppliers, and rejecting collusion between retailers; maintaining strong cash balances and buying forward on a rising market.

‘’Some two years ago we introduced a new strategy in terms of which we resolved to maintain and reinforce our dominance in the in Living Standards Measure (LSM) 8-10 market, through getting our offering and branding right, and to expand the Pick n Pay footprint in the LSM 4-7 market through our Score conversion project and a greater focus on traditional Black areas. At the same time, the strategy was designed to introduce greater operating efficiencies. As part of this strategy, we have invested considerable resources in improving our operating model, while simultaneously building a future which is firmly founded on sustainable business practices and the advancement of our Corporate Social Investment priorities.”

Ackerman has been described as "a passionate advocate of consumer choice" and has fought many battles with the South African government (both pre- and post-1994) in his attempts to free up the highly regulated South African fuel industry. Pick n Pay first tackled the issue petrol price-fixing in 1975, sparking the biggest row the South African fuel industry had ever seen. At the time, Pick n Pay managed to get an agreement to cut the price of petrol. This was permitted for a period of time, until complaints from vested interests caused Government to pass strenuous legislation to stop the company.

That fight lasted ten years until 1985, when Pick n Pay's attempt to introduce self-service at lower petrol prices was arbitrarily outlawed by government, followed by a directive to the oil companies to stop supplying Pick n Pay. The company was defiant and tried to find another way to discount through a coupon system. This argument found its way into the judicial system, with the court ruling in Pick n Pay's favour. Again in 2009 Ackerman called on government to review SA's "restrictive" petrol pricing structures "as a matter of urgency". Ackerman said petrol remains the only commodity to enjoy state-controlled pricing, "with all other mandated prices and Boards of Control already done away with, which is entirely appropriate".

In 2009 the Competition Commission initiated an investigation into major South African supermarket chains for possible contraventions of the Competition Act. They included Shoprite-Checkers, Woolworths, Spar and Pick n Pay. According to the Competition Commission, the investigation had been prompted by concerns raised by various interested parties and the public in general. One economist said the move was not only important for food prices, but could also signal a more aggressive approach to regulation by the new government. "We may be seeing signs of a more activist government in South Africa. The implication of this runs deeper than 'just food prices' - it may be seen as a landmark in terms of the approach of the authorities to regulating business" said Razia Khan, head of research for Africa at Standard Chartered.

Remark: The Competition Commission is independent, but some investors worry the government could exert pressure through antitrust authorities to promote its pro-poor agenda and possibly influence the outcome of corporate mergers.

Pick n Pay opened two new Hypermarkets in 2008/2009 at Woodmead in Johannesburg and South Coast in Durban; five new corporate and 12 new franchise stores; and converted four stores from corporate to franchise in line with its ongoing review of store operations.

The company plans to open four new corporate and 15 new franchise supermarkets and convert a further two corporate supermarkets to franchise.

In addition it converted 27 Score stores to the Family franchise brand and next year another 25 will be converted. Pick n Pay further opened another 24 (14 corporate, 10 franchise) liquor stores and one clothing store.