Richard Brasher's strategy gets tills ringing
When Richard Brasher took the wheel at Pick n Pay in 2013, he had to steer a ship that two decades earlier had been the envy of the retail sector but had since fallen behind.
Rivals Shoprite, Woolworths and Spar had all benefited from Pick n Pay's woes.
After a 26-year-long career at UK grocer Tesco, Brasher had the task of navigating a very competitive retail space without much local knowledge.
"The most challenging thing is not having grown up here in SA and not understanding the market, or the level of diversity and complexity of the market.
"Sometimes they look superficially the same, and what I know to be true six years on is that it's definitely not the same," Brasher told Business Times this week after the release of the company's full-year financials.
Shortly after taking over the reins, Pick n Pay exited its Mauritius operations and ended its partnership in Mozambique. Both countries had faced tough economic conditions and Brasher had enough to focus on in Pick n Pay's home market.
By one measure, Brasher has outperformed the market: Pick n Pay's share price has gained 50% since his appointment, while over the same period the food and drug retailers' index added a more modest 33%.
And in the 53 weeks ended March 3, Pick n Pay reported an upbeat set of results, sending its share price up 4% on Friday. Turnover for the group grew 7.1% to R88.3bn. Like-for-like turnover increased 4.8% in an economy that is barely growing.
Brasher said it took a few years to get to the point where the retailer is now more modern and relevant."By sticking to the plan, although it's slow and challenging and sometimes arduous, eventually it does start to bear fruit, which is what we've seen in the most recent result," he said.Pick n Pay has recently started transforming the look of its stores, giving them a more modern appearance. And behind the scenes it has put a lot of effort into its centralised distribution network, a move that has also helped its no-name house brand products.Under Brasher, the retailer also reduced the size of its labour force, cutting 3,000 jobs in the process.Brasher said the distribution leg of the business was getting better by the day."We hope to open another big depot at some point in the next 18 months just to fulfil our ambitions of expansion. It'll be to the north of Johannesburg."The number one priority is to be lean on the stuff that doesn't matter and generous on the stuff that does. Our mission is to try and make food and basic items for customers as inexpensive as we can," he said.Alec Abraham, senior equity analyst at Sasfin Securities, said Pick n Pay could not have found a better candidate for CEO. And Brasher had taken similar steps when he was involved in turning Tesco around a few decades ago, Abraham added."Tesco at that time was a very distant third player in the UK market. By the time Richard Brasher left, Tesco was one of the prominent retailers in the world," he said.Lester Davids, trading desk analyst at Unum Capital, said Brasher employed cost-cutting initiatives at Pick n Pay to try to regain ground lost to its South African rivals.Abraham said that Pick n Pay founder Raymond Ackerman, who started the company in 1967, was comfortable handing the business over to Brasher."I think Raymond [would have] felt very reserved in handing over control of his baby to a non-retailer," he said.The story isn't as rosy in some of the African markets in which Pick n Pay operates. The retailer said turnover for operations in markets outside SA tumbled 16.2% year on year on the back of tough economic conditions in Zambia and the impact of a currency wipeout in Zimbabwe.Despite these challenges, Brasher said he still saw an opportunity to forge ahead with the retailer's expansion programme."You have to have long-term strategic goals and not be distracted by short-term issues. The reality is that Africa is still a big opportunity for consumerism. Despite some of the short-term challenges in the countries we operate in, we still see a huge opportunity to expand," said Brasher.Abrahams said Shoprite, which has been operating in some major markets on the continent for decades, is in a better position because of the retailing experience and knowledge it has gained in those markets."Of all of the retailers, I believe [Shoprite] has the best opportunity to make money in Africa. A small exposure for Pick n Pay would be beneficial, but I wouldn't try to expand too quickly and make it too much of my business," he email@example.com