Some years ago, I was asked to contribute to a book on SA’s greatest entrepreneurs. I suggested doing a chapter on Whitey Basson, then CEO of Shoprite. I had no idea that Basson never gave press interviews and didn’t really like the limelight.
I think the only reason I got the interview was because of Basson’s corporate relations consultant, an old Business Day colleague, who didn’t even live in SA. The interview itself was a slightly dry affair, and the book’s editor, Moky Makura, who now works for the Gates Foundation, castigated me, somewhat justifiably, for including so few personal details and anecdotes.
But that was Basson; a canny, behind the scenes kind of tactician who felt a bit uncomfortable in public spaces. When he did let loose at financial presentations, the results were often disastrous, like the time he was borderline sexist about Shoprite’s all-male executive.
Hence, Shoprite’s media relations team was extremely cautious about personal interviews. Even finding the headquarters in Brackenfell, Cape Town, was a bit of an ordeal; a concrete and glass temple to city centre modernity they are not.
Basson opened the interview with an off-hand yet chip on the shoulder remark, saying he was born in Porterville but he always told people he was from Tulbagh — everybody (that is, all you wine-drinking snobs) knows where Tulbagh is but nobody where Porterville is.
But for me, even as a moderately informed observer of Shoprite over the years, the interview was an eye-opener.
I knew the group had bought and turned around two loss-making retailers, Checkers and OK, famously buying the latter for R1. What I didn’t realise was that when Shoprite bought the stores, it was making less in profit than both chains were losing. Both acquisitions were huge bets which could have put the entire group at risk.
I also didn’t realise that it was Basson who brought his former employer Christo Wiese into the first purchase of the six Shoprite stores in Cape Town. It now has 2,843 outlets in 14 countries, employing around 150,000.
He spent almost 40 years running the company he started. I emphasised several times to Makura, that whenever I asked him about himself, Basson kept on telling me about Shoprite. The store was his life.
It’s difficult to discern someone’s character accurately in a short interview, but I have no doubt that Basson richly deserved a place in a book on SA’s greatest entrepreneurs.
He was also a bit naughty. He told me the story about advertising huge discounts on pool chlorine. Even though Shoprite customers didn’t own swimming pools, it forced Pick n Pay to offer discounts too. But Pick n Pay sold more because its customers did have pools, so it hurt a competitor more than it hurt Shoprite. Such are the dark arts of retailing.
Why was he so successful? As always, it’s a hard question to answer.
Some of it was circumstantial. Shoprite’s rise was built on the move to the suburbs with their expansive malls and spacious, massively stocked stores. Being a latecomer was actually something of an advantage. The out-of-town store taught Shoprite how to run a depot-centred operation, which is so crucial to running a huge retailer. The mega-trend was the government’s increasing social pension payouts which went straight into Shoprite’s pockets.
But like everything in life, luck is very often earned. The group was also breathtakingly brave at times, not just buying Checkers and OK but also moving into the rest of Africa. While Pick n Pay was trying and failing in Australia, Basson had been quietly developing a sizable African operation.
I got a sense that this was Basson’s biggest disappointment; not starting the operation, which he continued to strongly support, but failing to get the volumes he knew he needed to make it really work.
Still, Shoprite’s presence in African countries is helping to bring cheap goods to consumers on the back of its local logistics operation, something Pick n Pay obviously could not do in Oz. In time that will shine through.
Basson left the group in January 2017, shortly thereafter selling a really mountainous bundle of shares in Shoprite worth around R1.6bn. I’m speculating here, but I have an inkling why he did it.
There were always rumours that he didn’t get along with Markus Jooste, his rival in the Wiese empire. If that is true, it is greatly to his credit, particularly in light of what happened not long afterwards. Basson left the group in the hands of Pieter Engelbrecht, who was lumped with a perfect storm of problems revealed in the results this week. The VAT increase, record fuel prices, sugar tax, listeriosis and currency movements all resulted in lower earnings and a rare dividend decline.
All of these are sporadic, but they point to a bigger problem: Shoprite is now a function of the SA and African economy, and that is a mixed blessing. It’s possible that economic growth in Africa will turn around, and it will be fabulous if it happens.
But management has a new challenge; how to grow beyond local economic growth.
It’s a tough ask. But then buying two bankrupt retailers was too.
Correction: August 23 2018
This article was amended to make clear it was Pick n Pay, not Shoprite, that sold more pool chlorine.
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