Tag: Game

Game headquarters could move to Jo’burg

Source: Supermarket & Retailer 

Durban could lose the headquarters of general merchandise retailer Game to Johannesburg, a move that could affect hundreds of staff members in the region.

Massmart Holdings Limited spokesperson Annaleigh Vallie confirmed that the move was eminent with Game management currently holding discussions with staff based at the retailer’s head office in Durban.

“It is, however, important to note that no decision on the move has been finalised,” said Vallie.

Massmart owns the South African local brands such as Game, Makro, Builder’s Warehouse, CBW and many others. It has four divisions, which are Massdiscounters to which Game falls, Masswarehouse, Massbuild and Masscash.

Walmart purchased a majority of shares in Massmart in 2011.

“The discussions are at a very early stage and currently involve consulting with approximately 330 potentially affected staff in order to ensure their input into the decision making process. From a legal perspective discussions of this nature typically take place within the framework of Section 189 of the Labour Relations Act.”

Vallie said currently no retrenchments were taking place in the region.

The company was of the view that if the potential move would take place, Game would benefit from being geographically closer to suppliers, Massmart and other group operating divisions.

Vallie said: “This in turn has potential to enhance commercial decision making and, group-wide collaboration and leverage.”

South African Commercial, Catering and Allied Workers Union (Saccawu) Kwa-Zulu Natal regional secretary Mathews Ndlovu said on Monday that the union was not surprised by the move. “Our objective is to try and make sure that there is no jobs lost in the process. We cannot stop the company from re-locating as part of their business restructuring,” said Ndlovu.

He said that if the staff members agreed to go to Johannesburg, they should receive relocation allowances and fees. “These things are on the table and have not been completed yet. As for those who are not willing to relocate must be accommodated in the perimeters of the province with same benefits which are not less favourable to what they are currently getting.”

Original article by Given Majola for IOL

Massmart could finally be starting to deliver after nearly a decade of less-than-inspiring results.

But the revival of the R91-billion annual sales Walmart-controlled retailer’s fortunes is far from being a slam dunk.

Massmart certainly pleased the market in its annual results announcement of a 15.8% rise in headline EPS (HEPS). This was greeted by a 16% rise in its share price.

Massmart’s pricey 25 p:e indicates that more of the same is expected. A big swing factor will be its ability to continue driving a recovery in its Massdiscounters division, which houses Game, one of the group’s flagship brands.

“Game is key to the Massmart investment case,” says Warren Jervis, manager of the Old Mutual Small & Mid Cap fund.

The signs are positive for the 165-store discount division. It came to the party in 2016, lifting profit before interest and tax (PBIT) by R129m (54.8%) to R364m.

It accounted for just under half the group’s total R264m rise in PBIT to R2.61bn.

The division’s 5.3% rise in sales to R20.5bn was nothing to rave about. Doing the heavy lifting was a rise in the PBIT operating margin from 1.2% to 1.8%.

But there is still a long way to go if Game is to return to its former glory when, at its peak in 2011, it delivered PBIT of R744m and a 5.6% operating margin.

Then the wheels started coming off. Key reasons for this included ageing stores and a failure to keep pace with a rapidly changing consumer electronics landscape. At its worst in 2014, the division’s PBIT stood at R181m.

Jervis believes Game’s recovery still has long legs. “There is no reason it cannot get its margin up to at least 3%,” he says.

It would make a big difference. On a 3% margin, Game’s PBIT contribution in 2016 would have been R615m.

A key factor in upping margins will be the rollout of Game’s SAP point of sale and enterprise resource planning systems.

“It will provide visibility of profit per product line,” says Sasfin Securities analyst Alec Abraham. “It will enable Game to fine-tune its product mix.”

Game’s turnaround was engineered by Massmart veteran Robin Wright, who stepped down as
divisional CEO in August 2016.

Tasked with the next recovery phase is Albert Voogd, who joined Massmart from Ahold, the Netherlands’ largest food retailer.

The selection of Voogd ties in well with Massmart’s big ambitions in food retail. There is already a notable swing in Game’s product mix to food and fresh produce which, together with a recently added liquor offering, accounted for 23% of Game’s sales in 2016.

This was up from 21.8% at the June interim stage.

Abraham agrees that Massmart can continue driving food retail sales at a well-above-market pace. In its favour, he notes, is a small market share of 2%-3% across its Game, Makro, Cambridge and Rhino brands.

But he has concerns about the general state of SA’s beleaguered consumer market.

“It does not support Massmart’s [big-volume, low-margin] business model.”

The signs of strain are already there, not least in the group’s largest division, Masswarehouse, which houses 20 Makro megastores.

While Makro did exceptionally well in 2016 to lift sales by 11%, it came at the cost of big margin pressure; PBIT of R1.25bn came in just 4.4% higher than 2015.

Taking even more strain was the Massbuild division, housing 102 stores under brands including Builders Warehouse and Builders Express. Sales for the year came in 5.6% up at R12.7bn, while PBIT — hit by margin squeeze — was up only 2.7% at R712.6m. More concerning is the fact that second-half PBIT was up a mere 0.7% year-on-year.

For Massmart, 2017 did not get off to a good start. In the eight weeks to February 19 the group reports total sales up a mere 0.6% and comparable (same store) sales down 1.5%.

It represents a significant slowdown against the previous three years. On a comparable sales basis, sales in the first eight weeks of 2016, 2015 and 2014 were up 6.9%, 7.9% and 7.7%, respectively.

Against the likes of Woolworths, trading on a 16 p:e, and even Shoprite on a 20 p:e, Massmart’s 25 p:e is looking decidedly stretched.

By Stafford Thomas for www.businesslive.co.za

SMEs and start-ups can now process card payments cheaply with a device from a leading local retailer.

A partnership between home-grown fintech-preneurs and one of South Africa’s largest discount retailers is set to help small businesses by allowing them to transform their phone into a secure mobile point of sale (mPOS) terminal. They will be able to process debit and credit cards, cash and mobile payments with an iKhokha device.

This low-cost payment system, developed by three Durban-based entrepreneurs, the father and son team Matt and Clive Putman, and close friend Ramsay Daly, rolled out into flagship Game stores across the country this week.

Says Jody Forrester, cellular executive for the JSE-listed Massmart subsidiary, Game: “Ordinary South Africans with a business idea can now walk into one of our stores and walk out with everything they need to start trading – equipment, tools, consumables, Internet connectivity and a safe, cashless customer payment device.”

iKhokha MD, Matt Putman, says iKhokha emerged from their realisation that small and startup businesses were often overlooked by larger institutions providing financial products and services. “We also recognised the challenges that people starting a business faced when it came to collecting cash and digital payments from customers.”

The iKhokha device is a mobile card machine that allows anyone with a small business to accept debit and credit card payments. The only requirement is a cell phone signal, and the buyer then enters his or her pin on the device. It is being sold in 11 Game stores nationwide and will be rolled out into 35 stores over the next few months.

“We are empowering entrepreneurs in South Africa by offering them all they need to start or grow their business using the Game Store Card, which gives them the cash flow flexibility required as a startup. They can then simply buy what they need, walk out of the store, and immediately start earning and trading using the low cost, mobile iKhokha device. They can buy the unit, or purchase it along with a SIM card and a smart phone as part of a Vodacom contract or a pre-paid option,” says Forrester.

iKhokha’s pricing is far below that of mainstream SME-focussed financial services products, with transactions charged at only 2.75% (excluding VAT) instead of the standard 3,5% that banks typically charge. But Putman says their device is far more than just a cheap payment device. “It provides the merchant with powerful information on their sales over time and empowers them to track and properly manage the finances of their growing enterprise.

“While cash payments can also be accepted, iKhokha eliminates the need for actual cash, which is expensive to handle, is a security risk and harder to track because it quickly gets ‘lost’ with day-to-day purchases not directly related to the business.”

This South African developed and manufactured solution has been through rigorous international testing with regulatory bodies and card schemes to ensure world class security. “The security certifications were an important factor in our decision to partner with iKhokha,” says Forrester.

iKhokha is a gold member of AlphaCode, a Rand Merchant Investments (RMI) club for fintech startup entrepreneurs.

RMI’s senior investment executive and head of AlphaCode, Dominique Collett, says: “We believe that the SME segment has been largely underserved by South African financial institutions. Yet the market is a significant one. Research shows that only an estimated 17% (+/- 1 million) of SMEs are formal and registered and therefore can access formal financial services. This number is even more significant when one sees that the average annual turnover of registered SMEs is around R1,3-million with an average annual net profit of R500 000.

“There is very low POS penetration in the SME segment (less than 10%), yet there is growing demand from consumers to transact in a cashless manner. This creates an opportunity to close the gap by offering POS solutions to about one million SMEs that do not have card facilities, yet most likely have a need for them. SMEs demand simple, low cost, convenient product offerings and we believe iKhokha delivers this with their simplified pricing structure and plug-and-play offering. Distribution is always a key element in the success of any financial services business, so the partnership with Game is an exciting one.”

Forrester adds that the incorporation of iKhokha into Game’s product offering is completely aligned with Game’s positioning as a South Africa’s leading discount retailer. “It underlines our strategy to continuously bring innovation into our stores, specifically around our in-store cellular offerings.”

“We also like that Game’s genesis was in Durban, KwaZulu-Natal, and iKhokha is a ground breaking innovation that comes from young Durban-based entrepreneurs.”

Putman explains, “The name is derived from the isiZulu word iKhokha which means they pay, he pays, she pays. Our goal is to transform small businesses through mobile innovation and become the go-to brand for SMEs seeking key financial services in SA. We also realised that we needed a distribution partner to make our device accessible to the majority of SMEs in SA. This partnership with Game is a huge step towards realising that goal.”

Follow us on social media: 

               

View our magazine archives: 

                       


My Office News Ⓒ 2017 - Designed by A Collective


SUBSCRIBE TO OUR NEWSLETTER
Top