Cape Town - Raymond Ackerman, SA's retail doyen, intimated on Wednesday there is a limit on how much a supermarket chain can fatten its trading margins.
Ackerman, speaking at a media function arranged for his retirement as chairperson of Pick n Pay [JSE:PWK], argued that it was necessary to find a balance between meeting consumers needs and making profits.
In a thinly-veiled reference to rival supermarket giant Shoprite , Ackerman said: "I would not, in today's climate, want to make a trading margin of 5%. I would knock it down."
Pick n Pay's last set of financial results showed a trading margin of 2.8%, while Shoprite's recently-released interim results showed its trading margin moving from 4.8% to 5%.
A trading margin reflects how much net profit a supermarket makes on selling merchandise. In Pick n Pay's case a can of beans sold for R10 would bring 28c profit, while Shoprite would earn 50c.
Ackerman - who conceded that Shoprite CEO Whitey Basson was "a good operator" - said he would not like Pick n Pay to make a margin of much more than 3% to 3.5%.
Ackerman (79), who built the Pick n Pay empire from a three-store chain, felt it was an appropriate time to hand over the chairperson seat to his son, Gareth.
"I've been working on this [retirement] for 10 years. Our advisers, who have helped guide us around retaining family control in the business, urged me to retire when I'm fit and well. They said don't put succession plans in place from a hospital bed or worse."
He noted it was not perfect to do the 'hand-over' of the lead at such a tough time in the economy. "But I can leave knowing the company has planned well for the future."
On current trading conditions, Ackerman said it seemed - according to his three main indicators - that SA was definitely emerging from a downturn.
The indicators, he explained, were stronger car sales, better chicken sales and an uptick in the membership of the Clovelly Golf Course (where Ackerman is a 'driving force').