From an operational perspective it is evident that Pick n Pay has been knocked off the top perch that it had effortlessly dominated for a few decades. But one top perch from which it is unlikely to be knocked is corporate social investment (CSI).
While CSI has become an almost fashionable accessory to 21st century corporate life, with its increasing focus on broader community issues and sustainability, it has been part of Pick n Pay’s life since Raymond Ackerman opened up four stores all the way back in 1967.
Indeed so ingrained is it in Pick n Pay’s life that the group often overlooks the need to shout every aspect of it from the rooftop that is provided by the annual report.
At Friday’s annual general meeting Wendy Ackerman, a director of Pick n Pay Holdings and a founding executive, explained to shareholder activist Theo Botha that the group has had a HIV/Aids programme in place since the early 1980s. The programme includes the provision of antiretrovirals to HIV positive employees and taking care of orphans of employees.
“Why was the programme not mentioned in the group’s integrated report?” asked Botha. “It has become so much a part of our everyday practice that we don’t always talk about it,” replied Ackerman, who added that future reports would include references to it.
What shareholders of Pick n Pay will also not see in any of the reports is that Ackerman has, in her personal capacity, rescued Cape Town Opera from the result of funding challenges with the National Lottery Board. The assistance, which Business Report stumbled upon some weeks ago, is not intended to protect a supposedly elite pastime but to secure the prospects of some amazing young musical talent. It is skills training and job creation at its best as this talent gets the opportunity to perform on national and international stages.
The fact that its commitment to CSI remains resolute in the face of the tough operating challenges besetting the company, lends considerable support to Pick n Pay’s “core principles”, which include “sticking to values – even if this appears to put us at a competitive disadvantage”.
It also indicates that the “four legs of the table” principle, which argues that social responsibility and people are as important as administration and merchandise, is indeed part of the group’s DNA. This is in stark contrast to the many companies for whom this '“touchy-feely” sort of stuff is little more than an after-thought that is only to be considered as they tick their way through the King 3 codes.
During financial 2011 the group spent the bulk of its approximate R75 million CSI budget on enterprise development.
Suzanne Ackerman-Berman, who chairs Pick n Pay’s social and ethics committee, says that the CSI spend has remained constant as a percentage of after-tax profit, but that over the years the projects on which it has focused have changed in line with the changing needs of the country.
In the early years of Pick n Pay there was greater focus on housing and education; these have not been abandoned, but Ackerman-Berman notes that there is now greater acceptance that the provision of housing and education are the responsibility of the government.
“We are now more focused on enterprise development and job creation.”
It is of course an area of corporate activity that has attracted much attention in recent months as three government departments and the competition authorities grapple with the need not only to protect existing suppliers to Massmart, but also to increase the opportunities to develop businesses that could benefit from access to the supply chains of Massmart and Walmart.
The extent of Pick n Pay’s long-term commitment to enterprise development does suggest that the R100m supplier development fund that Massmart-Walmart was required to set up in terms of the Competition Tribunal’s conditional approval of the deal was certainly far from onerous.
Indeed it is puzzling why the “expert panel” that was established in terms of the Competition Appeal Court’s subsequent ruling didn’t just interrogate Pick n Pay’s enterprise development experience instead of trying to reinvent this particular supplier wheel.
As part of its commitment to enterprise development, Pick n Pay has been assisting small businesses and producers to develop their enterprises through funding, mentorship and, critically, access to an extremely valuable outlet.
In Vanderbijlpark, Anna Phosa started a piggery with four piglets about four years ago. Last year Phosa came to an agreement to supply Pick n Pay with 100 pigs a week. Phosa estimates that being part of the Pick n Pay supply chain is worth R25m over the next five years.
Cheese, milk, olive oil, charcoal, eco-friendly bags and free range chickens are just some of the products that end up on the Pick n Pay shelves courtesy of the small businesses that it has helped to develop.
And so, much more than just shareholder returns are hanging on Pick n Pay’s return to its place on the top perch.