Pick n Pay changes management structures to recover lost market share
By: Edward West – IOL
Pick n Pay announced a swathe of senior appointments and created a new retail division in a restructuring to fix its core grocery store brand and recover from its last massive decline in profit.
CEO Sean Summers, appointed barely a month after the retailer reported a massive 97.5% decline in trading profit to only R31.8 million for the six months to August from R1.25 billion in the same 2022 period, said in a statement the appointments were a key step to return Pick n Pay supermarkets to growth, whilst also ensuring the Online, Boxer and Clothing continued to deliver.
In an interview with Business Report, he said that the restructuring was the “most profound event” in their history, as changes were required for operations that had been in slow decline over 10-15 years.
However, they had set realistic goals, the changes would take time, and “things may get worse for a period before it gets better.” He did not expect there would be retrenchments.
He said they would formulate a new strategy for a sustainable future for the group, over the next three to four months.
“Pick n Pay will undergo an immediate structural adjustment to allow it to focus with clarity on customers, buying, store execution and the store estate,” he said.
He said the new structure was necessary because the number of stores in the group had about doubled since when he had initially left the group about 16 years ago, while the “operating infrastructure is about a smidgen of what it used to be.”
The recovery, however, will likely take time. For instance, Gryphon Asset Management portfolio manager Casparus Treurnicht said it might take longer than the two years that Summers initially suggested it would take, to turn around Pick n Pay’s core supermarket operations.
Treunicht said the management appointments were not unexpected given the last financial results. Also, he said Pick n Pay’s major competitor Shoprite “can’t seem to do anything wrong at the moment.”
The changes, including the new regional heads, indicated a desire to tighten controls over operations and “getting people back to work,” he said.
Pick n Pay yesterday announced that a group executive of six members had been appointed, three of whom were women, including CFO Lerena Olivier, Chief People Officer Thembi Mbengashe and Managing Executive for Clothing Hazel Pillay.
Dallas Langman was appointed to the new position of Managing Executive of the Pick n Pay Retail Division. Langman (54) had been with the group for 34 years, and he was most recently Managing Executive of the Rest of Africa division.
Prior to this, he held senior management roles within Pick n Pay Supermarkets, Hypermarkets, and Franchise.
“Langman is respected for his ability to drive consistent operational standards and team performance, and will work closely with Summers to lead a step-change in the performance of the core Pick n Pay retail business,” the group said.
Johan Grobler would take over the Rest of Africa leadership with additional responsibility for Value Added Services and Tomis, the newly acquired meat producing and processing facility.
Grobler (57) had been with the group for 32 years, most recently being Head of Fresh Produce and Trade. Marek Masojada remains Boxer Managing Executive.
Streamlining reporting lines would allow Summers to lead effectively, focused on the future, with highly experienced retailers reporting directly to him in six focused areas, the group said.
“The changes will allow us to focus with clarity on the job at hand. This includes creating a new, dedicated head of Retail, regionalising our Retail division to allow a much sharper focus on our customers, and the creation of a dedicated Commercial section to focus on our products across the retail spectrum.” said Summers.
The new Pick n Pay Retail division would focus on retail at Pick n Pay, which needed the most attention.
“The actual trading in franchise will fall under Retail, which is where it should be. The customer will now see one Pick n Pay with the same execution and the same operational standards as corporate owned stores. It will now be a seamless experience for customers,” said Summers.
A new Commercial division under Pick n Pay Retail would be led by two seasoned experts in buying across Food, Fresh and General Merchandise.
“Hazel has produced stellar results at Clothing...Boxer is an incredible business and Marek has done a superlative job. We foresee even greater things for Boxer under his continued leadership.”
Thembi Mbengashe would head HR for Retail. She would work with Summers on succession planning for the CEO and the senior management team, with a focus on our transformation objectives.
Five regional heads were appointed to get closer to customers, as well as a head of Retail Hypermarkets.
“With six reports, I can now focus properly on the next three years and build for the future. The new structure will enable clarity of leadership across our business, with seasoned professionals in charge,” said Summers.