How Raymond Ackerman Got Fired From Checkers To Launching Pick N Pay

For over 54 years, Pick N Pay has without doubt been one of South Africa’s leading food, clothing, and general merchandise retailer.

Since its inception, the company has long been an advocate of “consumer sovereignty,” focusing most of their efforts on the retail discount market.

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Pick N Pay runs through a system of 2 segments: South Africa and Rest of Africa.

Its South African segment operates in many forms under two brands: Pick N Pay and BOXER. Its Rest of Africa segment, is in charge for the company’s growth into the rest of African continent.

The company mainly focuses on food, liquor, clothing, non-edible groceries, pharmaceuticals, tobacco, beauty products and general merchandise.

On top of that, it also offers ticketing services, cash withdrawal at till points, airtime sales, gift card sales and 3rd-party bill payments just to mention a few.

Pick N Pay operates on both an owned and franchise basis. It currently has over 1795 stores across all formats, which includes: Hypermarkets, Supermarkets, Family Stores, Express and the recently introduced Spaza Shops.

It also has a 49% shareholding stake in TM Supermarkets, one of the leading retailers in Zimbabwe.

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Pick N Pay currently employs over 90 000 people, thus making the company one of the largest employers in the African continent. It also supports small businesses to help propel them to profitability, through its numerous partnership programs.

Over the years, the company has expanded its brand to other African countries including the likes of Lesotho, Swaziland Botswana, Namibia, Zambia and Nigeria.

This strategy of always championing consumer sovereignty, has helped Pick N Pay generate billions upon billions over the years, with sales exceeding over $5.7 billion just this year alone.

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THE BEGINNING

To understand the story of Pick N Pay more clearly, one has to go back to the 1916s, when Gus Ackerman, the father of Raymond Ackerman, opened the very first ACKERMANS store in Cape Town, with a vision of making value-for-money products affordable to everyone.

The ACKERMANS brand appealed to the value-seeking consumer and attracted a broad audience.

At that time when his father was running the store, Raymond was studying commerce at the University of Cape Town under noted economist W.H. Hutt, whereby the philosophy of “customer sovereignty,” was instilled on the young Ackerman.

After graduating from University, still in his early 20s, Ackerman went to work for his father’s business as a trainee manager in 1951. However, Ackerman’s first position at his father’s company was a mere store greeter.

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In this way, Gus hoped to instill the importance of politeness for the store’s customers, while at the same time, also helping Ackerman overcome his shyness.

As time went though, Raymond was promoted to work at ACKERMANS distribution warehouse, whereby he worked for over 2 years.

GREATERMANS

In 1960, ACKERMANS was bought by department store rival, GREATERMANS, its main rival which was based in Johannesburg. Rumor has it that GREATERMANS reportedly took its name from its ambition to be greater than ACKERMANS.

Anyways back to the story. Part of the deal Gus made when he sold ACKERMANS was that his son would get a position at GREATERMANS. Raymond then served as a manager at a series of small-town stores during the mid-1950s.

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FOOD RETAILING

In the early 1950s, the American-styled self-service supermarkets were first introduced. This inspired GREATERMANS to venture out to food retailing as well.

The company then added a supermarket to its Springs store, placing Raymond in the store as an assistant manager.

Upon reflection, Ackerman said the experience as assistant manager proved to be a life changing one, because it was the time he found his true calling, which was in food retailing.

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FORMATION OF CHECKERS

After foreseeing the potential of the supermarket format in South Africa, Ackerman persuaded GREATERMANS to launch its very own supermarket called CHECKERS.

In 1956, Ackerman was assigned by GREATERMANS chairman, Norman Herber, to help open the very first CHECKERS store in Mayfair, Johannesburg.

Two more stores were subsequently opened in Germiston but unfortunately, they all failed.

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US TRIP

Puzzled by the failures, Ackerman asked the board to let him go to the US, because at that point, none of them knew anything about running a supermarket.

After a hell of a battle with the board, he was allowed to go on a trip to America alongside Wendy, his wife.

When he got there, Ackerman proved he wasn’t on any vacation as he decidedly took a hands-on approach. He worked in every area of the supermarket operation; from serving in the butcher section to stocking shelves and putting price tags.

During his American trip, Raymond also met up with Bernard Trujillo, the so-called “Pope of Modern Distribution,” who held that customer sovereignty represented an “enlightened form of self-interest.”

Trujillo became, alongside Gus Ackerman and Hutt, another major influence in Ackerman’s rapidly evolving retail philosophy.

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RISE OF CHECKERS

When Raymond came back after 6 months of gruesome learning, he was so instilled with the know-how of running a supermarket and thus, was ready to also put that into CHECKERS.

Upon returning to SA, Ackerman was all set to start building the CHECKERS chain. However, he ran into a great deal of resistance from the GREATERMANS board, as they saw CHECKERS as a department store, instead of a supermarket company.

Despite lacking the freedom to implement his retail philosophy in Checkers, Ackerman nonetheless succeeded in expanding the CHECKERS from just 5 stores at in 1960, to more than 85 by 1965.

By then, CHECKERS had become one of the leading supermarket group in South Africa, it also had begun to outpace GREATERMANS itself.

However, the success of Checkers led to soured relations between Ackerman and the Greatermans board.

At a later interview with Sunday Times, Ackerman said the relationship had reached a point where there was even a jealousy factor involved.

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THE START OF PICK N PAY

In 1966, when he was 35, Ackerman was called into a room with executives from OK Bazaars, Woolworths and Spar, whereby the chairman told him he had to fix prices with those executives in order to have an advantage over competition.

Ackerman blatantly refused, because according to him, price fixing was not only illegal and wrong, but it also stood against everything he believed in.

After the heated meeting, Ackerman knew deep down that his days were numbered as MD of CHECKERS.

3 days later, the prophecy came into a realization when he received a call from the chairman to tell him he was fired.

This was a very difficult period for Raymond because 2 weeks prior, he had lost his father to cancer and now coupled with his dismissal, he was really sad, confused, frustrated and on top of that, didn’t know what to do.

Despite these enormous setbacks, Ackerman still held onto his retail dream.

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JACK GOLDIN

A few weeks after the news of his exit broke out, he got a call from a man named Jack Goldin(the founder of CLICKS), who offered to sell him his startup called Pick N Pay.

Ackerman had formed a relationship with Jack, during the time he was hands on deck with CHECKERS. He personally gave Jack a tour of the stores he was running.

At that time when he gave him a call, Goldin wanted to exit supermarkets and figured the freshly unemployed Ackerman was his passport out.

With little capital, Raymond brought along 40 shareholders and entered negotiations with Goldin, which dragged late into the night. Eventually, Goldin sold the 4 stores he owned for over R620 000.

According to Ackerman, being fired forced him to get out of the frustrations of having to deal with the GREATERMANS and gave him the free rein to build what he wanted to build in the retail market.

With Pick N Pay, he now had the freedom to implement the ideas he’d incubated since his US trip.

In its first trading year, Pick N Pay achieved a profit of R310 000 on a turnover of R5 million. Turnover subsequently climbed to over R10 million rands and doubled the following year.

By 1968, Pick N Pay went public, listing its stock on the Johannesburg Stock Exchange.

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PRICE WARS

After seeing the amount of success of Pick N Pay was having, executives at CHECKERS and OK Bazaars started a price war with Raymond in the Cape.

At the height of the war, Ackerman was contacted through a letter by a Port Elizabeth businessman, who offered to sell him his small supermarket.

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EXPANSION OUTSIDE CAPE TOWN

Ackerman went to Port Elizabeth the same day to buy the shop, after a friend of his adviced him to treat these price wars as if it were a military campaign

Two months later, a fully renovated Pick N Pay branded store opened its doors for business.

This chess move forced Checkers and OK Bazaars to choose between expanding the price war they had launched, or withdrawing. In the end, Pick N Pay’s rivals chose the latter, and the Cape Town company began its ascension to becoming South Africa’s leading retail group.

Pick N Pay quickly captured the attention of South Africa’s financial community as well. By the end of the decade, the company had begun receiving praise from the financial press, and soon was named to the Sunday Times’ Top 100 companies list.

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JOBURG FIRE

Pick N Pay continued to expand beyond the Cape Town region. However, Its move into the important Johannesburg market was unfortunately met with resistance.

Pick N Pay’s own survival appeared to be at stake, after a suspicious fire destroyed its first store in Johannesburg.

Although he didn’t have the evidence, Ackerman had always suspected that the fire might have been caused by his competitors, and he also blamed the fire as the cause of his mother’s death.

After Ackerman’s mother read about the fire in newspapers, she passed away as she couldn’t no longer succumb to the pain of seeing some people trying to sabotage his son’s blooming business.

A regular person would have called it quits after the blow, but not Raymond Ackerman, the fire disaster made him more determined than ever to impose his retailing vision on the South African market.

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PICK N PAY HYPERMARKET

In 1973, the company announced that it would be building the country’s first, hypermarket store, a large scale format, which combined department store offerings with supermarket operations.

Pick N Pay opened the doors of its first hypermarket in 1975, smashing all previous sales records in its first year of operation.

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AUSTRALIA

Raymond Ackerman next attempted to grow the group’s format into a new foreign market, entering Australia with a highly successful store in Brisbane in the early 1980s.

Unfortunately, the group’s attempt to open a 2nd store in Melbourne around 1984, became caught up in the international resistance to SA’s apartheid policies.

Funny enough, under Raymond’s stewardship, Pick N Pay served as an advocate of SA’s own anti apartheid movement.

Long before apartheid ended, the management at the company had been fully integrated and changed. This made an average of 50% management positions held by black citizens.

The group was forced to withdraw from Australia. The company licked its wounds by further growing its SA’s retail presence once again. This time, acquiring the Boardman’s hardware chain in 1984.

The purchase helped raise the company’s profile, and boost sales to more than R2 billion by 1986, more than doubling sales in just 3 years.

By the end of the decade, Pick N Pay had over 100 stores throughout the entire country.

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END OF APARTHEID

In 1994, apartheid came to an end. The company was again caught by the political environment despite its progressive policies, as it found itself faced with a massive strike.

Through Ackerman’s lenses, this crisis presented a new opportunity for renewed corporate growth.

The company worked out a new trade union agreement, which then set into place a renewed corporate culture, to guide it into the new dawn of democracy.

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ORGANIZATIONAL STRUCTURE

At the same time, the company established a new organizational structure, based on two core divisions: Retail, which took over the various Pick and Pay formats, as well as the Family franchise store format launched in 1994

And also, Group Enterprises, which took over the company’s acquisition of a majority stake in the predominantly rural based Score supermarket group, as well as other retail businesses.

Interestingly, Pick N Pay also targeted international expansion, adding stores in the neighboring markets of Botswana, Swaziland, and Namibia. The company also briefly entered Tanzania, but sold its holdings there in 2002.

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FRANKLINS

Instead of moaning about how things didn’t work out in Tanzania, Ackerman tried again to make a re-entry into the Australia, by buying up Franklins in 2001, with the hopes of reviving the struggling retailer.

With the Franklins deal, the group got over 50 stores under the Franklins and No Frills formats, which were primarily located in the New South Wales market.

After continued losses year in and year out, Ackerman had to accept Pick N Pay’s fate with the Australian markets once again, by selling its Franklin division to Metcash in 2011.

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BOXER ACQUISITION

In 2002, the retail giant paid up a whopping 185 million rand to acquire 36 Boxer stores, in order for the Group to best serve the consumer market place that Boxer continued to dominate in.

GO BANKING

In 2005, as a way to focus its efforts on customer service, Pick N Pay launched GO Banking with Nedbank, an in store savings account that could buy anything off the shelves.

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FRUIT & VEG CITY

In 2007, Pick N Pay tried to expand its South Africa retail presence yet again by agreeing to acquire Fruit & Veg City, a chain which had over 90 stores at that time, but that move was ultimately blocked by the Competition Commission.

BP GARAGE

In 2008, to further expand its retail offering in South Africa, Pick N Pay partnered with BP Garage, to build over 120 food express stores at its fuel stations, the partnership has been a successful one and still exists to this day.

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TM SUPERMARKET

In November 2010, Pick N Pay acquired a 25% stake in leading Zimbabwean food retailer, TM Supermarket. The shareholding stake was further increased to 49% in 2011, which ultimately strengthened the company’s presence in Zimbabwe.

RETIREMENT

In March 2010, after a 43 year long career with the company, Raymond Ackerman officially retired from his position as chairman of Pick N Pay. His son, Gareth Ackerman, took over from the old man and the company still experiences growth under his reign.

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