South African retailer Pick n Pay has moved swiftly to dispel speculation that it is involved in talks with the leading UK retailer, Tesco Plc.
The speculation was fueled by Pick n Pay’s announcement that it is in the process of retrenching 3,000 staff members.
This announced again followed a recent visit to Pick n Pay by Tesco Plc executives. Neal Quirk, Group Operations Director at Pick n Pay is reported as denying trade union claims that the planned retrenchments are ahead of Tesco Plc acquiring Pick n Pay.
Quirk said that in the wake of the Walmart transaction with Massmart, 'all the global retailers are coming to South Africa to see what's happening'.
In June Pick n Pay chairman Gareth Ackerman said there was no substance to reports that the British retail giant was talking to Pick n Pay about a possible transaction. Mr Ackerman said Tesco had visited Pick n Pay and met with some executives, but stressed that there was no substance to reports of a possible transaction between the two groups.
In drawing an analogy between the events leading up to the recent take-over of South African retailer Massmart by Walmart, the Independent Online speculated that the Pick n Pay move seemed like a case of déjà vu.
'Now Pick n Pay has announced its intention to retrench over 3,000 full-time staff. Analysts say that given the poor performance of the business and the fact that Pick n Pay is overstaffed, it should come as no surprise, even to the unions,' the Independent Online reported.
The Pick n Pay move has caused outrage in the trade union movement. The Congress of South African Trade Unions (Cosatu) is reported to have expressed shock at the announcement of retrenchments, and said in a statement it would back any action its affiliate, the South African Commercial, Catering, and Allied Workers' Union (Saccawu) took to save these jobs.?? 'We cannot afford to lose still more jobs at a time when unemployment is still a national crisis,' the group noted.
??Cosatu dismissed Mr Quirk's explanations that the decision was taken because of the company's declining profitability and the loss of market share, with the trade union group saying that it had predicted the Walmart deal would lead to retrenchments in other retail companies as they struggled to compete with the global retail giant.
'Pick n Pay is proving us to have been right,' Cosatu said.?, adding that the attack on jobs would strengthen its determination to stop the so-called 'Walmart invasion'. ??the group said that said jobs, not only in Massmart stores, but in other retailers like Pick n Pay and in the South African manufacturing industry, would be under threat.
Whether Pick n Pay and Tesco Plc are engaged in talks or not, the latest rumour of retrenchments will do nothing to improve the tense atmosphere between the trade union movement and employers throughout the country. At last week's trade union congress, Cosatu threw down the gauntlet by promising 'massive strikes' during the next year if demands are not met.
This week, a strike by metal workers brought certain sectors of the country to a standstill. 'Employers would be targeted in 'the mother of all strikes,' the trade union declared. There is also tension between the trade union movement and its government partner, the ANC, with the country's president Jacob Zuma being singled out for major criticism. In the end the South African President admitted that his party was in disarray.
For the fresh produce sector this spells a period of instability and disruption at a time when it already has to contend with huge cost increases in electricity and oil, and with an exchange rate heavily stacked against them.
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