LAST year retail giant Pick n Pay spent R760 million on procurement from small suppliers and are aiming to spend at least 13 percent of their total procurement of R38 billion on small suppliers by the end of this year. So says Pick n Pay Transformation Manager, Nolubabalo Ndevu.
One of the recipients of the R760 million procurement spend is Goedgedacht Foods. “Since becoming a supplier to retail giant Pick ‘n Pay Goedgedacht Foods have gone from supplying farmstalls and delis to Pick n Pay distribution centres across the country,” says Goedgedacht director, Rob Templeton.
The business, which was registered in 2003 and is based in Riebeeksrivier Valley in the Western Cape, processes olives into Table Olives, Extra Virgin Olive Oil and also manufactures a range of fruit-infused vinegars.
Business is all about networking and this is what helped Templeton get his foot in the door with Pick n Pay.
“I was introduced to Suzanne Ackerman, Pick ‘n Pay’s Director of Transformation, and she has been instrumental in making sure we were able to attain the listing of our products (at Pick ‘n Pay),” says Templeton.
First a meeting was set up between Templeton and one of Pick ‘n Pay’s buyers. “I had to do a presentation where we discussed retail selling price and promotional activities,” he says.
He was successful in his presentation and Goedgedacht Foods became a supplier to the distribution centres across the Western Cape.
“We achieved a national listing in September 2008 and since then our sales have more than doubled,” says Templeton.
Johannah Moriti, owner of JOM Cosmetics who started her business in 2005, says her turnover grew by two 200 percent since becoming a supplier to Pick n Pay.
Moriti whose core business is to formulate, manufacture and distribute natural cosmetic products also became a supplier after doing a successful presentation to Ackerman and the buyers at Pick ‘n Pay.
She cautions prospective suppliers that the first listing is often the most difficult.
“You need to make your appointment at least two to three months in advance… they expect you to know your story when you get the appointment because you may have only one chance to impress them,” says Moriti.
She also advises suppliers that the opening of an account and loading of products is a long process and you will need VAT registration and bank account information ready or else this could further lengthen the process of listing your product.
Payment from big business is always a contentious issue for small businesses, but Templeton says he has never had a problem receiving payment from Pick n Pay. Small suppliers are paid within fourteen days of invoicing.
Templeton says that small suppliers wanting to supply to retail businesses need to be cognisant that they are a blip on the radar and are competing with big brands.
Says Templeton: “It is difficult for Pick ‘n Pay to list a product as this sometimes means that they have to delist another product.”
Ndevu echoes this sentiment and says that there is not a lot out there that has not been done yet and small suppliers have to find a niche market if they want to compete with big name suppliers.
“How are you different from big business? Your product needs to be grabbing to a particular market,” says Ndevu.
She says that suppliers wanting to do business with Pick ‘n Pay would receive mentorship, advice and funding but these are subject to certain conditions such as being a registered business, paying tax, and knowing the brand and the products should be barcoded.
In 2008 Pick ‘n Pay along with the Sunday Times launched its Small Business Incubator where it grooms small suppliers so that their products are ready for the shelf.
According to Ndevu, the purpose of the Small Business Incubator is to try to get business owners on a level where a buyer would want to procure from them.
She says the growth of businesses in the Small Business Incubator is measured in terms of turnover. For example, a business is considered to be a “baby” where the turnover is under R5 million, between R5 million and R15 million the business is considered to be a “teenager: and over R15 million the business is considered to be ready to do business without the assistance of the Small Business Incubator.
However, Ndevu says that small suppliers interested in doing business with Pick ‘n Pay and who are not part of the Small Business Incubator should not hesitate to contact the retailer.
She says there are different distribution sections in Pick ‘n Pay and each buyer for those sections determine the standards for suppliers.
This could range from accreditation to certain testing such as soil and water testing depending on the product.
Moriti offers these last words of advice to prospective suppliers: “We started from the kitchen without capital and have now expanded to Europe. If I have done it you can also do it. Use what you have.”