Richard Brasher. Picture: BLOOMBERG/ DEAN HUTTON
Richard Brasher. Picture: BLOOMBERG/ DEAN HUTTON

The news that Pick n Pay has retrenched 10% of its workforce came as a bit of a shock. But it shouldn't have, at least not this week, anyway.

Neatly tucked away on page 45 of the company's booklet for its annual results for the year to end-February, released in April, was this sentence, if anyone had bothered to read that far: "... Pick n Pay launched a voluntary severance programme (VSP) in March 2017, that is expected to be finalised by the end of April 2017."

If you missed that, it was mentioned again on page 11 of the annual report, which was released in June.

So the company, which released an update on the process on SENS this week, was surprised that we were all surprised.

But yes, it was still surprising - actually, more alarming. It's the first time Pick n Pay has launched a group-wide voluntary severance programme. Crikey. How bad is it out there if retailers that sell essentials such as food are taking strain?

After all, this is the company that, in 2015, said it would create 5 000 jobs a year and open more stores.

How things change, and how quickly - a few ratings downgrades, anaemic growth, political chaos and, of course, a continued rise in unemployment, to which a business that relies on employed people to spend their hard-earned cash is now contributing.

But aside from CEO Richard Brasher referring to the "tough trading environment" in a statement issued on Monday, the company did not lay the blame for the retrenchments on the economic and political crises in which the country is mired, even though there is ample material it could have latched on to.

It is well known that Pick n Pay has some specific issues - for example, David North, group executive of strategy and corporate affairs, said employee costs were higher than its competitors'.

The job cuts were part of a turnaround plan, which relies on increasing sales and reducing operating costs, he said.

Its relatively high employee costs are perhaps to be expected as it has a reputation for being one of the better employers in the retail sector.

Although I can't vouch for it, the maternity benefits must be among the best in the country: a maximum of 11 months leave of which nine months are paid in part and two months are unpaid.

The maternity benefit is for permanent staff (which accounts for the majority of the retailer's employees) after having worked for the company for just eight months.

Pick n Pay says after the retrenchments there have been no changes to benefits for employees who decided to stay.

It also says it will open more stores and employ more people. Yet late on Friday, it confirmed that it had issued further retrenchment notices.

The job cuts are depressing, regardless of when they were announced. They follow store closures at other retailers and more job losses are possible at other food retailers. There have also been heavy job losses in the mining sector (and more to come) and shrinkage in other sectors of the economy.

Soon, there will be thousands more people who no longer have work, and it's going to make the task Pick n Pay has set for itself to increase sales a whole lot harder to achieve.

Enslin-Payne is deputy editor of Business Times

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