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Trading after economic disruption

by Louise Burgers. Ackermans’ CEO Charl Cronje, says the non-essential retail sector will go through a negative slump post-lockdown due to the restriction on trading under the lockdown period; but also because the majority of consumers will not have money to spend after lockdown.

by Louise Burgers. Ackermans’ CEO Charl Cronje, says the non-essential retail sector will go through a negative slump post-lockdown due to the restriction on trading under the lockdown period; but also because the majority of consumers will not have money to spend after lockdown. In an interview with Retailing Africa, Cronje said they were looking at various scenarios to define strategy for the business going forward.

With over 800 stores nationwide, Ackermans is a leading South African value retailer within the Pepkor group; stocking affordable family clothing, footwear, general merchandise, cellular and other value-added services. Cronje has been with Pepkor for over 30 years and prior to taking over leadership of Ackermans in 2016, was managing director of Pepkor Africa. His leadership style is hands on, and he spends a great deal of time in the stores, engaging with customers. Cronje believes a crucial aspect of his role as CEO is to continue to strengthen unique company culture and values, ensuring his team is empowered to execute a well-defined strategy. Cronje’s philosophy is: “People don’t care about how much you know, until they know how much you care.”

RA: What are you doing for your staff under lockdown?

CRONJE: Our first priority is the health and safety of our staff and of our customers. Ackermans is defined by our purpose of bringing value to life for all stakeholders and now is the time to demonstrate our passion and to live true to this purpose. Our workforce of 11,500 people across our 834 stores have been put on paid leave for the duration of the countrywide lockdown and will remain at home until it is the right time to open the stores. Prior to the lockdown we made provision to pay salaries by special arrangement which was implemented beforehand, allowing all Ackermans staff the opportunity to prepare for the shutdown.

We have been communicating with staff on an ongoing basis delivering safety messages, words of encouragement and imploring them to adhere to the new government regulations. We remain in constant contact and will remain connected to our staff during this time. The business leadership are addressing business continuity plans on a daily basis and once any future plans are made available, we will make an announcement.

RA: How are you communicating with customers during this time?

CRONJE: We remain connected to our customers using our digital channels. As we are a non-essential provider, our primary focus has been to take care of our staff and provide them with the necessary reassurances. Presently, we continue to offer tips and advice to mothers on how to stimulate and keep their children busy during the lockdown. Prior to the lockdown we extended our lay-by payment terms to 15 May. Customers were given the opportunity to settle their accounts before the lockdown and take their goods home with them; but ensured that those who were unable to do so, that their goods will be made available once stores reopen. In addition to this, we have created additional platforms where customers can pay their accounts in order to have money available post the lockdown period. We continue to wish our customers safety and calmness in the coming weeks.

RA: Have you been in communication with suppliers?

CRONJE: Our suppliers and service providers are very important stakeholders in the Ackerman’s world, and we are in constant communication with them to identify new ways of ensuring our global supply chain will continue to function effectively. We rely on a number of suppliers to provide quality goods to our stores but as we are a non-essential service provider, we need to continuously look at our disaster recovery planning and the implementation once the lockdown is lifted.

RA: What changes do you expect in the retailing environment post-COVID-19?

CRONJE: Compounding the pre-existing economic challenges and uncertainty faced by many in the retail industry in South Africa, COVID-19 is causing massive economic disruption for companies at all stages of the supply chain. Retailers, suppliers and manufacturers are set to see production delays, delayed or reduced shipping and freight options, halted factory operations, store closures and impediments to distribution, while drops in revenue may prevent companies from meeting their baseline costs and expenses.

A systematic, pre-emptive response to the economic consequences of COVID-19 may help companies gain early traction and resist a downward slide. Non-essential retail specifically is going to have a down slump both because people aren’t going out; but also because majority of South Africans won’t have the money to spend. At this stage retailers and their suppliers still need relief. Our government are undertaking something that has never been seen before and we will work together to plan how we will come out of this.

All retailers are planning for the ‘what next’: there are a number of immediate and future strategies that will be looked at and scenarios and strategies played out to ensure future sustainability. As business leaders, it is our responsibility to continue to support and protect our employees, continuously monitoring indicators of how the pandemic is evolving and conducting scenario planning. We are continuously thinking about the future needs of our customers beyond coronavirus and evolving plans to ensure business continuity to the benefit of all stakeholders.

 

Louise Burgers (previously Marsland) is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.

 

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