CBN ARCHIVE - November '2000:
South Africa - November '2000 - Succession succeeds at P'nP

.PICK 'N PAY Stores recently unveiled a set of stunning interim results that signalled just how successful chairman Raymond Ackerman had been in adopting a new model for the family-owned business.

Half-year sales topped R7 billion, suggesting that with Christmas trading still to come the group could notch up full year sales of over R15 billion. Already Pick 'n Pay can lay claim to being the biggest food retailer in South Africa with a market share of some 40%.

Even more impressive is the fact that trading margins edged up markedly to secure a 28% growth in bottom line profits for Pick 'n Pay of over R120 million.

Retail experts would agree Pick 'n Pay's results can be attributed to timely refurbishments of its stores, astute cash management and a renewed focus on its core supermarket business. But much of Pick 'n Pay's success stems from landmark corporate decisions made in the boardroom on the top floor of the company's Claremont HQ last year.

For years Pick 'n Pay had to endure criticism from investors around a cumbersome ownership structure that kept the Ackerman family in control of Pick 'n Pay.

In this regard succession plans were critical as Raymond Ackerman, who has headed the group for over three decades, could realistically not be expected to continue running the business on a hands-on basis in the years ahead. In his last annual report Ackerman stressed: "Pick 'n Pay is first and foremost a family business, and this, we believe, is a major contributing factor not only to our success, but also to the respect we enjoy from the South African public." Ackerman conceded, though, that this also meant Pick 'n Pay's corporate governance rules had to take into account the demands that being a family business placed on the group, not least of which was the question of succession planning.

Because Ackerman was keen to keep Pick 'n Pay under family control many assumed that family members would be appointed to key management positions. In 1996/97 Gareth, Raymond's eldest son was appointed joint MD of Pick 'n Pay along with Sean Summers. Ackerman jnr was put in charge of Group Enterprises, which comprised Pick 'n Pay's new retail ventures and offshore projects, while Summers looked after the core supermarket business. But significant changes to management took place when Pick 'n Pay decided in 1999 to refocus on its core supermarkets and franchising business and relinquish its 'distractive' enterprises like the 7-Eleven Africa joint venture, the PNA news agents and an offshore convenience store venture in the Philippines. Because Summers had run Pick 'n Pay's supermarkets and hypermarkets with such success Ackerman had no hesitation appointing him as chief executive officer. The office of chief executive was a specially created position that for the first time showed Ackerman's willingness to loosen his grip on the retail business he so carefully nurtured from the 1960s. Ackerman assumed the position of chairman while Gareth was appointed deputy chairman of Pick 'n Pay with the task of looking after the family's interest in the group. The appointments for the first time passed the executive management baton to someone outside the Ackerman family. Insiders say Ackerman's willingness to appoint Summers to the top position in Pick 'n Pay not only spoke volumes for Summers' retail skills but also his ability to foster a corporate culture where staff are motivated at all levels.

Ackerman described Summers' appointment as a significant step that placed Pick 'n Pay at the forefront of transition taking place worldwide. Essentially the move changed Pick 'n Pay from a family-owned and managed business into one managed by professionals while still owned by the Ackerman family.

Earlier this year Ackerman said: "Family ownership underpinned by professional management has empowered Pick 'n Pay to plan and act in the long-term best interests of all stakeholders."

Pick 'n Pay's interim results to August 31 this year already show the first fruits of the decision to separate family, ownership and management.

This stands in stark contrast to so many family owned businesses (including a handful in the Western Cape) that have stumbled when the management baton was passed from father to son. The Ackerman family still have strong board representation through Raymond, wife Wendy and Gareth - providing ample reassurance to investors and staff alike that the anchor shareholder still wants to keep its finger on the pulse of Pick 'n Pay's business.

While the family might run the boardroom there's no question that Summers runs Pick 'n Pay, and, as Pick 'n Pay's annual report states - the buck stops with him.

Having worked his way up through the organisation Summers knows every facet of the retail business, and has already set ambitious goals for Pick 'n Pay in the years ahead, including fattening up the company's already impressive trading margin and bolstering the franchising side of the business.

He seems well on the way to achieving these goals when he told a media briefing recently that Pick 'n Pay was "a happier and more hard working place than it's ever been before".

Now that sounds like a family business in the truest sense.