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Prices at Pick ‘n Pay Stores were cheaper than at supermarket competitors but consumers did not necessarily agree, said chairman Raymond Ackerman.

May 30, 2007

By Tom Robbins

Cape Town – Prices at Pick ‘n Pay Stores were cheaper than at supermarket competitors but consumers did not necessarily agree, said chairman Raymond Ackerman.

According to the retailer’s 2007 annual report, the company would focus on restoring this perception, long seen as a core reason for its success over the last 40 years.

But in the most recent results available, rival Shoprite Holdings has been growing sales faster than Pick ‘n Pay.

In the half-year to December, revenue at Shoprite was up 14.9 percent, while in the year to February sales at Pick ‘n Pay grew by 12.1 percent.

Pick ‘n Pay said research done by Adcheck from October had shown a basket of common goods sold by Shoprite as well as Spar Group was cheaper at Pick ‘n Pay across the country, apart from KwaZulu-Natal in December, where the Checkers hyper format was cheaper.

But Gryphon Asset Management chief investment officer Abri du Plessis said yesterday that retailers commissioned their own surveys and there was a lack of independent research on supermarket prices.

Pick ‘n Pay executive director David Robins said there were some basic things that the company could do to change perceptions, such as improving in-store point of sale information.

He said the retailer would also consider using clear signage to point consumers directly to products on special.

He noted that at times rival Shoprite would focus on a limited number of products at “killer prices”, while Pick ‘n Pay would advertise a broader array of products at cheaper prices. This did not necessarily get the message across as effectively.

Most of the changes would be implemented by the end of the current financial year, following the most thorough review of the business by Bain Management Consultants.

Ackerman received a 15 percent pay increase in financial 2007, while outgoing chief executive Sean Summers had his pay cut by 8.3 percent. Ackerman was paid a total of R5.27 million, while Summers received R10.62 million, according to the company’s annual report.

Unlike the previous year, Summers was not paid a performance bonus. Had he not been paid an early retirement fee of R5.4 million, his total pay would have been almost halved. In 2006 Summers earned a performance bonus of R6 million