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Ackerman says he'll jump only when he hits top speedHeather Formby looks behind the scenes at Pick 'n Pay's corporate succession puzzle RAYMOND ACKERMAN knows he cannot be at the helm of Pick 'n Pay forever. Like Donny Gordon, who has appointed former JSE president Roy Andersen as chief executive of Liberty Life, Ackerman must decide who will take over when he decides to make way for the younger generation. Now 65, Ackerman is formulating his succession plan. He doesn't want to outstay his welcome and says he will quit his post as CE once Pick 'n Pay has had a few years of strong growth - at least 20% - and is poised to sustain 15%-20% growth in the following five years. When he does leave, which he says will probably be in about four years' time, he wants to stay on as executive chairman. The obvious choice for CE is his son Gareth, 39, who was introduced to retailing at the age of nine when his father was still at Checkers. After school and on Saturday mornings, Gareth packed butter and swept supermarket floors. He ran the Plumstead store fruit and vegetable department at 16 and has worked his way through the ranks in various management positions. Gareth is now MD of Group Enterprises, and manages the strategic investments made here and internationally under his division. The latest investment, announced last week, is a joint venture with Cape-based convenience store chain 7-Eleven. Pick 'n Pay will own 60% of the group outside the Western Cape, with 7-Eleven keeping 40%. Existing businesses under Gareth's division include Boardmans, Score's Rite Valu franchise supermarkets, stationers PNA and Paperbacks, a significant interest in TM Supermarkets in Zimbabwe and Pick 'n Pay's franchised outlets. Also on Gareth's plate is a proposed international acquisition, fighting the government's liquor and petrol laws and formulating a plan to market financial services products in the Pick 'n Pay group's stores. Ackerman would clearly like to keep the business in the family. But Gareth has to prove he is capable of being chief executive, which Ackerman sees as the co-ordinating link for the entire business. "I have been examining top structures around the world and there are many solutions which don't conform to the obvious," says Raymond Ackerman. One of the important links in the succession plan will be a non-family member, Sean Summers, 42, the energetic MD of the Pick 'n Pay core business - supermarkets, hypermarkets, superstores, family stores and Price Rite. He has introduced a new dynamism which Raymond's wife, Wendy, says she hasn't seen since the first hypermarket was opened in 1975. Unlike Gareth, who is a strategist and intellectual, Summers is a trader who runs the day-to-day operations. "He haggles with suppliers and gets staff fired up," one staff member says. Summers' job is to get the core division firing on all cylinders. Ackerman has left the running of this division to Summers and his colleagues, and now he has to decide how Summers will fit into the succession equation. Summers is ambitious and has worked his way through the ranks of Pick 'n Pay for the past 22 years. Summers won't be happy in the same job for the next 20. So Ackerman's dilemma is how to keep both Gareth and Sean happy by letting each of them do what they're best at. "I want to design a structure in which Gareth and Sean complement each other." The most obvious scenario, and one which Ackerman is looking at, would be for Gareth to become CE and Summers to be made Group MD overseeing a number of divisions each run by their own MDs. Raymond Ackerman's youngest son, Jonathan, who is working in the Boksburg Hypermarket, is being groomed to possibly take one of these positions. Though his future role is as yet undecided, Jonathan, like Summers, is a trader. Ackerman's other children are also in the business. Daughter Kathryn does design work for Boardmans and Suzanne was consulted in the redesign of the Pick 'n Pay Claremont store, which introduced a new food section on the same lines as European fresh food markets. Raymond's wife, Wendy, has been in the business since the start and likens herself to the mother confessor of the company, "the last door before despair". She has played a key role in the business. One observer says: "She's the lock and Raymond's the forward." So Pick 'n Pay looks likely to remain in the family, something which Summers sees as a good thing. "I would prefer to have an Ackerman chairman than an outside appointee." Ackerman's dabbling with his succession plan comes at a time when the Pick 'n Pay group is edging forward on another growth path. Now that the group's growth prospects are no longer static, he feels the time has come to let new blood run the business. The day-to-day running has already been taken over by Gareth and Summers while the two older Ackermans and deputy chairman Rene de Wet keep a watchful eye. Before the restructuring of the group into two divisions in 1995, Pick 'n Pay was not growing. Growth in turnover and profits had been flat since 1989 and the joint MD structure of Rene de Wet and Gareth wasn't working as responsibilities weren't defined. At the same time, a strike forced the group to look at its labour relations policy and to acknowledge that what had worked in the 1970s and 1980s wouldn't work in the 1990s and beyond. In 1993, MD Hugh Herman left to follow his own interests and Ackerman had his eye off the ball concentrating mainly on Cape Town's Olympic bid. He was also chairman of CIES, the French acronym for the World Food Forum. Both Gareth and Sean knew that a change in direction was needed. Ackerman appointed consultants Bain International to analyse the company and identify issues needing attention for the group to regain its upward profit path. Their solution was to focus the business and redefine organisational structures. The aim: to give more power to the younger executives. The most significant change was to separate the group into the core business, Summers' division, and non-core business, which Gareth runs. Gareth sees this as an interim measure. "The group will probably become a multidivisional company with separate divisional teams." The success of Pick 'n Pay depends on how well Gareth and Sean work together. So far, it seems, so good. One complements the other - Gareth looks at the macro view while Summers concentrates on the micro vision. Neither can do without the other. For example, Gareth is formulating a plan to sell financial services products through Pick 'n Pay stores. He can't do this without Summers, and vice versa. Summers leaves the succession solution to the chairman, saying: "I'm sure whatever he comes up with will be the right thing," he says, though he sees the running of the core business as his task. Gareth also realises that the succession plan will have to be what's best for Pick 'n Pay. In the meantime, the group is getting going again. Though August interims didn't show a spectacular growth in turnover - just 9,8% to R4,6-billion, headline earnings were up 34% to R51,8-million and EPS 25,7% higher at 10,37c. March year-end figures are expected to meet 20-25% growth targets. The market seems to be anticipating this - the share price has risen 16% this year. Since the 1995 restructuring, Pick 'n Pay's share price has been on a general upward trend - barring a sharp slide in the middle of last year. Young ideas will make sure Pick 'n Pay is a different group in five years' time.
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