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Posted by on Jul 24, 2009 in Business, South Africa | 6 comments

Pick ‘n Pay Under Investigation

My good friend FLY just handed me this press release from Pick ‘n Pay.

Food prices: one of my favorite topics!

We've worked hard to earn your respect

Dear Pick n Pay customer

Over the past few weeks, many of you will have seen stories in the media about the investigation into the retail industry to be held by the Competition Commission.

We’ve worked hard to earn your respect over the last 42 years. This we’ve done by consistently fighting cartels, price-fixing boards of control and a heavy handed government in the past. This is part of who we are and it’s a fundamental principle of what has made us one of South Africa’s top companies.

Contrary to what you may have read, there is no allegation of price fixing levelled at the retailers.

The Commission is investigating four rather complicated areas which are applicable to all retailers in South Africa, many of which are part of the retail industry worldwide. As you would expect, we will give the Commission our full co-operation. We have absolutely nothing to hide.
There is hardly a South African who will not have seen just how dramatically food prices have risen over the past 18 months, after a period of relatively low food inflation. Inevitably, customers want answers as to why food prices continue to go up when some commodity prices are coming down. We ask ourselves that same question, and it is one we ask our suppliers every time there is an increase, with no decrease. The answers are not simple ones and even top economists struggle to find a simple explanation.

What we can tell you is that the price of goods in South Africa is affected to a large degree on things that sometimes are out of anyone’s control. This may include the Rand/dollar exchange rate, monopolies in the supply chain (like tin manufacturing), SAFEX, commodity prices, the cost of labour and distribution, global food shortages, supply and demand, the cost of electricity and other variables. When you look specifically at our costs, about 60% is labour. Other factors include rent, rates, electricity, bank fees, maintenance of stores and packaging to name a few.

We also understand that your frustration at rising high prices is felt at the till. We are the last point of contact between how goods are grown or manufactured and you, our customer. It’s only natural therefore that customer attention would be focused on the supermarkets when they feel aggrieved by rising prices.

The good news is that we are seeing signs of prices coming down or at least, a slowing of the rate of food inflation. What we can promise you is that we will always fight for the best possible prices for you.

Many of you will have questions. Many of you may have doubt about certain critical issues. Some of you may have believed what you have read or seen. We understand that. So while this investigation is not specifically aimed at us, we’ve nevertheless developed a special link from our website that may help you understand these issues a little better.

We’ve also included a short “Frequently Asked Questions” with this letter. Please read it if you have an interest. If you’d like even more information, the link to our website is www.pnp.co.za/ccinvestigation.

This process is likely to take a considerable amount of time because the retail industry is a very complicated one. We’d like you to know that everything we do is aimed at our customers. “Inspired by you” is not a slogan – it’s the way we live our values. This is how we started from four small supermarkets into the company we have become today. Importantly, this will not change.

Thank you for supporting Pick n Pay.

Nick Badminton
CEO: Pick n Pay Stores

6 Comments

  1. Hell, that's one long arsed story!

    [Emphasis in 1st few paragraphs inserted by moi]

    • Ya, this is a very complicated story. Can I make a repost of a blog I wrote about food prices from my point of view?

  2. I wont believe a word these crooks say until I saw prices come down, more stuff in my packets, and more money in my account.

    • As above, this is very complicated sittuation. Market costs/forces/demands have changed alot during these increases and decreases. Electrical costs have risen 32+31% in the last 13 months. To my busines that means an extra R3000 + R4030, alot of input cost increase.

  3. Argh,.. all I know is that my money is worth $%#^! Can't bank it, can't spend it.

    Will have to go back to the good o'l days of gardening and keeping a couple of chickens and cows in the backayard.

  4. <blockquote cite="#commentbody-517">

    VOTED! Now lets UNITE! :

    Ya, this is a very complicated story. Can I make a repost of a blog I wrote about food prices from my point of view?

    Sure thing. Maybe just let folks here know why you are so interested in the topic…

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