Pick n Pay initiates Section 189 process to reset labour cost base

Pick n Pay is tackling the high cost and inflexibility of its staff base at its stores as the next step in its long-term turnaround strategy, which continues under CEO Sean Summers.

Sunday (3 May) saw it initiate a formal Section 189 process with its South African Commercial Catering and Allied Workers Union (Saccawu) members and other store-based employees who are in the non-management bargaining unit. The retailer also confirmed the move in a Sens filing on Monday.

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The process is not at all intended to reduce the headcount, but rather to “bring the retailer’s labour practices more into line with its competitors to compete on an even footing”.

Various signed agreements with staff and unions over time, the results of which have compounded, have seen (among others) flexibility in scheduling all but disappear.

This is akin to an empty restaurant that is fully staffed from 9am to 5pm, with part-time staff then needing to fill the gaps when there are actually customers in the evenings.

Shopping habits have changed materially in the past decade and Pick n Pay, like its rivals, needs to be fully staffed after ‘work’ and on weekends, not the other way round.

The current situation no doubt has store staff working a ‘normal’ week, with variable time employees and casual labour being used to supplement this. In many ways, it is unnecessarily paying extra for staff.

Sure, there would be additional temporary staff brought in at peak month-end (for example), but the business ought to be able to roster effectively using the existing staff complement it has (there is no point at all in having a fully staffed shop at 11am on a Thursday).

In addition, various benefits and allowances (again, many of which were accumulated over time) have helped drive remuneration of staff to levels that are “above market norms”.

It is well known in the market that the tenure of Pick n Pay’s staff in particular has resulted in a situation where its staff are, on average, among the best paid in retail.

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Summers says: “We must now address a critical reality that our current store labour model has been out of balance in the marketplace for some time.

“While established with positive intention, these structures have become increasingly complex, reducing flexibility and our ability to respond to retail trends and customer demands.

“If we are to compete on an equal footing in an increasingly constrained marketplace, we can no longer sustain structures that are materially above market norms, especially while trying to return the business to profitability.

“Simply put, without change, this will put the business’s future at risk.”

The business remains in the throes of a delicate turnaround, which has not been linear.

It has been necessarily complex and Summers has tackled various problematic elements of the business almost simultaneously since he unveiled the plan in May 2024.

Key to this has been addressing the fact that the core supermarket business he inherited was unprofitable.

Already, it has shut or converted 65 stores and will deal with a further nine in the coming two years as leases run out (a full 27 stores of the original base of up to a hundred-odd potentially affected stores have turned profitable, meaning they have been removed from this plan).

Rentals are only one part of its cost base, and staff in management and support functions have seen salary freezes for two years.

Along with dealing with costs, it absolutely has had to accelerate the momentum in top-line growth.

At the end of 2025, it experienced a setback, with trading since September “below expectation and the result of a highly constrained market, particularly over the extended Black Friday period”.

This will see it report a wider than anticipated loss for the 52 weeks to 1 March (previously, it saw losses in line with last year).

This news sent shares down as much as 14% on the day.

Organised labour has been apprised of the full turnaround process, and staff on the shop floor will have known first-hand the details of the retailer’s struggles.

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Says Summers: “Our priority through this process is to protect jobs wherever possible while building a more sustainable business. Our goal is to ensure that Pick n Pay can grow again, open more stores and continue to provide work for people in the future.

“To achieve this, we must stay competitive, be financially viable, and serve our customers in the way they choose to shop,” he adds.

“We recognise this will be a difficult time for affected employees, and we are committed to a fair, transparent process in line with our values and labour legislation.

“This will be a challenging time, but we also know that hard decisions must be made to align with market realities to secure a stronger, more competitive, and more sustainable business.”

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