How Raymond Ackerman built an empire

Raymond Ackerman built an empire from the simple philosophy that if you look after the community, the community will look after you, writes Gasant Abarder.

On his first day at varsity, Raymond Ackerman’s lecturer, Professor WH Hutt, asked him and the 40 others in his commerce class why they were there.

Before anyone could answer, Hutt said: “I’ll answer for you: you all want to make money quickly. Put your hands up, if that’s why you’ve come here.”

When Raymond and his classmates put their hands up, Hutt told them: “I’m going to fail you all in three years time if you haven’t changed your views by then.”

Raymond describes that first day at UCT as life-changing.

“He hammered into us for three years that you’re in business for the consumer, like a doctor is there for his patients. The more you care about your mission, the more successful you’ll be.”

Raymond was excited to tell his father, Gus, what he had learnt. But Gus wasn’t impressed and threatened to remove his son from the university if he followed the advice of this “egghead” professor.

Raymond counted his father as one of his mentors but Hutt’s philosophy stuck with him. It was a philosophy that would get him fired from a job as a retail managing director at the age of 35.

On the morning of this Friday Files interview, a few days before his 85th birthday, Raymond has no regrets.

He greets photographer Tracey Adams and I warmly, before asking what we’d like to drink. Later, when we leave, he wants to know if we have transport.

It reminds me of the first letter on my desk after I became editor of the Cape Argus in 2009. It was a letter of congratulations and best wishes, personally signed by Raymond Ackerman.

It is his way. But it is also the way of his wife Wendy and the entire Ackerman clan. Raymond has built an empire from the simple philosophy that if you look after the community, the community will look after you.

It’s not just big talk.

Over the past weekend, I was officiating at the Cape Town Cycle Tour with Raymond’s daughter and Pick n Pay’s Transformation director, Suzanne Ackerman-Berman. As we waited for the prize-giving, I watched as she engaged with the Pick n Pay staff – all on a first-name basis. The respect was mutual. The energy spoke of employees who love what they do and the people they work for.

It is a deliberate part of the family ethos and the business. It’s Raymond’s table with the four legs. On top of the table is the mission: the consumer comes first.

The first leg of the table is profits, expense control, admin and the running of the business.

The second leg is the merchandise they sell. “Giving the consumers the range they want and not what the accountants want,” says Raymond.

The third leg? Let’s get back to that.

The fourth leg is the people, including the family and the thousands who work in the business all over the country.

The third leg, which also includes advertising, is equal to the other legs in terms of importance. But Raymond describes it as the key leg – social responsibility.

Think about it: when there’s a fire in Cape Town, Pick n Pay is usually first to react with humanitarian aid. The retail giant has helped the Red Cross Children’s Hospital develop world-class facilities.

The family foundation supports vast numbers of charities and NGOs. And the business pumps resources into developments that allow young people from disadvantaged communities to excel in sport and academia.

But it was this value system that led to Raymond being fired by the Greatermans group after he opened 89 Checkers stores for them in eight years. He grew up in the Ackermans stores his father co-owned until 1946.

“I used to go around stores with my father a lot in the old days. He used to make us work in stores with him, every Christmas holidays.

“We weren’t allowed to go to the beach or do anything until after Christmas. He was a very disciplined man and very disciplined with us,” he said.

“There was this American Bernardo Trujillo – a real tough, hard-nosed businessman who had gone right through the American supermarkets business from the beginning. He talked the same language (as Hutt).

“In the ’30s, during a huge depression, the people who cared about the consumer and cared about the society, genuinely, were the ones who succeeded and built their businesses over the years.

“So I was influenced by my father, by this chap Professor Hutt and Trujillo.”

By 1956, Raymond was working for Greatermans as a trainee manager and a manager of some its department stores.

That year, he was assigned to help open the first Checkers store in Mayfair, Joburg. But it failed and so did two other stores that subsequently opened in Germiston.

“I said to the board they must let me go to America. None of us know anything about a supermarket. Checkers failed and the reason was the board didn’t understand it either.

“They wanted to use gross margins that worked in a department store, with credit and delivery, in the supermarket business.

“They said they knew how to run a business. I said, ‘You don’t, the American supermarkets are totally different. Let me go before you close it down.’

“After a hell of a battle I got a trip to America and my wife Wendy came with me. They paid for me and I had to use my savings to take Wendy. I came back and I was so instilled with what I had learnt from Hutt and Trujillo, I tried to put that into Greatermans.

“To cut a long story short I was 35 when I was fired. They told me I couldn’t cut prices. But I built a business for them putting in these American ideas from the age of 27 to 35 and we opened 89 stores.

“Checkers was quite dominant but they wouldn’t give me the freedom that I needed and I fought like hell. I understand why they got rid of me because I was fighting every single day. I’m quite a quiet guy, I don’t fight normally.

“But the pièce de résistance of the whole thing was when I was MD of the whole operation, they called me in when we had 89 stores and said: ‘Raymond, there’s too much price cutting.’

“They called me into a room with OK Bazaars, Woolworths, Spar and everybody and the chairman said to me: ‘Raymond, you have got to fix prices with these guys.’

“That was firstly illegal and wrong and unethical and everything against what I believed. I said I refused to do it.

“The chairman of the company wanted me to sit down with these guys every week to fix prices. I said I wouldn’t and walked out of the meeting. I knew I was going to get fired.

“Three days later they called me in and I was fired at 35. I didn’t know what to do.”

Ackerman contacted Trujillo, who described it as “the best thing in the world that could have happened”. His advice: start your own business. Wendy, with four children, was firmly in Raymond’s corner and encouraged him to go for it.

“I looked all over the country for a business to buy to start with something. Jack Golden, who started Pick n Pay here, had met me six months earlier. I had taken him around the Checkers stores after he asked me as a favour.

“He said he was a competitor who was opening three stores in Cape Town and wanted to see how we operate. He was so impressed with that because he was a baby and I was running 89 stores.

“He phoned me when he saw I had been fired in newspapers and said: ‘I want to sell Pick n Pay.’ I flew down to Cape Town. My accountant friend said, ‘Don’t worry, Raymond, I’ll fix the finance but let’s just negotiate.’ I came out at R620 000 for the three stores. I had zero cash, a little bit saved up.”

Financial backers came up with the lion’s share of the cash needed. But Raymond, thanks to his reputation with Checkers, was the majority shareholder.

Finally, with his own business in Pick n Pay, Raymond had the freedom to implement the ideas he’d incubated since his US trip.

Next he pioneered “No Name Brands” to save the consumer extra cash and then the famous war on petrol and bread prices, going head-to-head with the apartheid government of the day.

Then the concept of the hypermarket was born.

Raymond also, at the height of apartheid, broke the law by appointing black people as managers at stores in white suburbs. Many of those black managers are now franchisors and executives of Pick n Pay.

The transformation continues to this day, with a multitude of black entrepreneurs on the payroll of Pick n Pay as suppliers of merchandise and fresh produce. Staff regularly receive shares in the business as well.

Today there are 1 600 stores countrywide, employing hundreds of thousands of people.

“All along it was about the consumer sitting at the top of the table. If you put your profits first as your mission, you won’t do the right things by the community. It came from Hutt and Trujillo. Four legs of the table – I’ve run my whole company on this, what I’d learnt way back when I was a youngster.

“Profits are terribly important, but that’s the first leg. How you account, computerisation, expense control… the tough side of the business. Your profits are there, not sitting at the top of the table.

“They come because the more you care about the consumer, genuinely, the more they’ll back you. I built Pick n Pay on that terribly simple philosophy and we run it today in the same way.

“It’s amazing how people can influence you if you’re not big-headed. I’ve got a lot of faults but I’m not big-headed and I’ve listened.

“These values became absolutely part of my being and why I was really in business.”

Raymond retired five years ago. But he is very involved in the philanthropy work of Pick n Pay and his family foundation.

About 10 years ago the company went on a drive to modernise all the foundations Raymond had laid over some 40 years, including central warehousing and more efficient distribution.

“I had all these wonderful young people who had built our company but we needed someone who had international experience. We made a dramatic move and brought in an international CEO and (Raymond’s son) Gareth was made chairman.

“Quite frankly, it’s been an amazing combination. It’s really worked. They’ve modernised but yet the principles remain the same.”

Nowadays, he admits, it’s tough not to get involved in the business.

“The hardest thing for me was to give up interfering. I talk to the CEO (Richard Brasher) and Gareth, we have a special meeting once every two weeks and they listen to some of what I say and for other things they’ll say, ‘It’s the old guy talking…’ “.

Typically, Raymond spent the birthday at an AGM and dinner with one of the NGOs he is involved with. Tonight though, there’s a big family dinner.

“It’s not a party. And I said no presents please, I just want you to be there.”

Then he quips: “I need to start getting into shape to blow out 85 candles.”

* Gasant Abarder is the editor of the Cape Argus

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