Illustrative image: Shoppers outside the Boxer store – one of South Africa’s fastest growing discount grocery chains – in Protea Glen, Soweto. (Photo: Reuters / Siphiwe Sibeko) | Pick n Pay logo. (Photo: Reuters / Siphiwe Sibeko) While the Pick n Pay business turnaround that veteran CEO Sean Summer is executing began a long time before the current Middle East conflict, having the company chief referring to a section 189A process as “an important part of our turnaround journey” must have stung for the affected in-store workers.
Fuel prices are surging and the associated price increases are gnawing at empty wallets, but Summers says that “we must now address a critical reality that our current store labour model has been out of balance in the marketplace for some time”.
There can be no envy for the position of CEO of one of the country’s biggest retailers who had to write to staff to explain how the company “priority through this process is to protect jobs wherever possible while building a more sustainable business”, and about a goal to ensure that Pick 'n Pay can grow again, open more stores “and continue to provide work for people in the future”.
There was an easier time in his current tenure when the difficult decision was to spin off the wholesale retail arm of the business (read: Boxer) to raise capital to pay off historic debt. Boxer is soaring now, free of the retail burden of fighting for premium pockets.
An anatomy of retail success
Boxer CEO Marek Masojada was on the polar opposite of the labour relations spectrum with his words accompanying the retailer’s maiden 52-week performance results.
His proclamations were of “51 net new stores opened to take the Boxer retail estate to 576 stores”, how “new stores contributed 7.8% to total turnover growth... demonstrating the strong performance and quality of recently opened locations”, and, crucially, “3,400 jobs created, to take total employment to 35,314 employees”.
Masojada has the numbers to prove it. Boxer’s sales jumped 12.3% over the past year. They’re stealing customers from competitors through all those new stores and actually dropping their shelf prices by 1.2% while the rest of the country’s grocery bills climbed by 4.4% on average.
When a discount supermarket can make things cheaper for shoppers and still deliver a massive 26% return for its investors, it’s no wonder the stock market is grinning.
Back at the mothership, Pick n Pay is bleeding. The company recently warned its shareholders that its financial losses for the year will be at least 20% worse than the brutal beating it took last year.
Management had to eat humble pie, calling the heavier losses a “disappointment” that missed its own targets. While there were brief flickers of life in its core supermarket aisles earlier in the year, sales flatlined over the past five months – dragged down by a quiet November and a painfully slow clothing market. That turnaround is not a 180° turn.
One battle after another
That bumpy road is exactly what led to the section 189A announcement to open the month of May. Pick n Pay intends to force major changes to how its store staff work and are paid. While the retailer is legitimately trying to avoid job cuts, the first and deepest cut by management is the premium pay for Sunday shifts.
Then they plan to make weekend work mandatory, and potentially slash guaranteed working hours from 196 down to just 130 a month for full-time staff.
The major retail union, South African Commercial, Catering and Allied Workers Union (Saccawu), is understandably “disturbed, but not entirely surprised”.
The union represents about 60% of the 22,000 affected workers, and has called the move a “bombshell dropped right after Workers’ Day”, and that Pick 'n Pay fired this shot without first consulting Saccawu.
They’re accusing the retailer of acting in bad faith, pointing out that Summers conveniently forgot to tell the public that both sides had already signed a prior agreement to fix these staffing and scheduling issues.
Spinning off Boxer did its job: it exposed the massive value of the discount chain and paid off the immediate debt choking the wider group.
But while Boxer races ahead, creating thousands of jobs and banking cash, Pick n Pay is stuck in a corner facing the bell toll of a painful, expensive restructure. DM