Pick n Pay: Transforming South Africa Through Corporate Social Responsibility
G
areth Ackerman, Chairman of Pick n Pay Holdings Limited (Pikwik), doesn’t just preach corporate social responsibility (CSR): he lives it. Pick n Pay, a 40-year-old family controlled enterprise, has had the same philosophy since Ackerman’s grandfather opened a dime store sixty years ago—doing good is good business. To start with, Pick n Pay did not wait for CSR to become popular. Since the company’s inception, it has pre-empted trends with its focus on environmental sustainability and small business viability. First they began buying produce from small black farmers in an effort to sustain small businesses. Then the company trained these farmers in organic farming techniques.
When he spoke at The Fletcher School as a guest of the International Business Global Speaker Series, Ackerman showed just how a business can flourish by doing the right thing. Purchasing from small farmers costs more money than dealing with fewer, bigger suppliers. But Pick n Pay refuses to stray from its philosophy of doing good, and Ackerman insists that the aim is to make a fair profit and not necessarily maximize profit. This approach certainly appears to be working for them—they have 815 stores in five countries in a corporate and franchise environment. Last year they earned 40 billion South African Rand (USD $7B) and their purchasing power parity is double that.
Pick n Pay is keen on encouraging entrepreneurship in low-income South African communities so that money will stay local and grow the economy. Ackerman sees this same entrepreneurial spirit driving his own company as he feels that, “Leadership is showing people where to go, entrepreneurship is doing things.” Pick n Pay not only shows South Africa’s farmers a way out of poverty, but is also determined to nurture the next generation of black entrepreneurs who create localized wealth and prosperity. Ackerman noted how in South Africa, the average Rand is spent and earned (a process called “spinning”) 12-15 times. But in black communities a Rand only spins once. In other words, money in the black community creates one transactional footprint after it enters, preventing the community from building wealth. However, with the help of Pick n Pay, small farmers sell to their own community, spinning the money locally and multiplying the economic effect.
Ackerman believes that a part of Pick n Pay’s mission lies in influencing big suppliers to behave in a manner that is more socially, economically, and environmentally responsible. He has refused to deal with those who will not change their ways. Ackerman anticipates a ripple effect where suppliers around the world will be forced to consider more than just prices, as even companies like Wal-Mart have begun demanding more CSR from its big suppliers. Other forces also pressure companies to be more responsible. “The triple bottom line is driving business around the world,” explained Ackerman. Wall Street punishes firms who do not consider CSR—even if such programs are only “window dressing.” Most importantly, customers may also punish these firms by not patronizing their stores. Whereas ten years ago customers made purchasing choices based on price alone, now consumers are better-informed and more socially-aware, and far more likely to consider a company’s values when they go shopping.
An annual survey of retailers showed that CSR, which ranked eleven among their top concerns in 2006, moved up to number three last year. This year it is number one. For Ackerman, CSR is deeply embedded into the values of Pick n Pay. He deeply believes that the only way to do good business is to take care of his society which will in turn take care of him. A student attending the talk asked him, “But how do we do that?” Without hesitation Ackerman replied, “Do what is right. If you are not personally comfortable with it, it must be wrong.”
Cybčle Cochran MALD ‘09