Tag: Makro

Makro and Game unveil Black Friday plans

Source: Supermarket & Retailer

Massmart has revealed the Black Friday 2020 plans for its Game and Makro retail stores. Both Game and Makro will be running Black Friday deals throughout November 2020, instead of their previous strategy of only releasing deals for a restricted three- to five-day period from 27 November.

This year, Black Friday deals from both stores will run from 2 – 29 November.

Massmart added that this plan will involve spreading deals over the month of November rather than concentrating deals into just one week or day.

“Black Friday traditionally sees high concentrations of shoppers in retail stores across the country, which can create a challenging shopping environment,” said Massmart Corporate Affairs Executive Brian Leroni.

“Therefore, we have taken the decision to reimagine the way we do Black Friday in 2020.”

“In an effort to create a more consumer-friendly Black Friday experience while adhering to all COVID-19 and social distancing protocols, Makro and Game have taken the decision to extend the duration of our Black Friday promotion,” Leroni said.

South Africa’s most popular Black Friday stores

Leroni added that Massmart’s research has shown that Game and Makro are South Africa’s most popular Black Friday shopping destinations.

“To further improve the shopping experience during this period, Game and Makro have, after analysing the Black Friday shopper information available to us, taken the decision to provide our customers with more opportunity and time to benefit from the Black Friday prices by rather releasing new Black Friday deals each week during the month of November,” Leroni said.

“These unbeatable specials will only run for the week in which they are announced, and will not be offered again – so we encourage shoppers to take advantage of the deals each week, rather than waiting until the end of November as they normally would.”

More information about the incredible deals including some big-ticket items such as large appliances, electronics, home living items, televisions and more will be provided in the coming weeks, the company said.

It added that sneak previews of some of the deals will be available on the Game and Makro social media feeds and email newsletters.

“Customers can subscribe to Game and Makro newsletters on each of the brand’s websites for sneak previews,” Massmart said.

 

Source: Supermarket & Retailer

Makro and Game owner Massmart says that its losses for the half year ending 29 June 2020 will be slightly lower than previously expected – but it still expects to take a significant hit.

In a sales statement published on Thursday (20 August), Massmart said it expects headline losses for the period to be between 31% and 41% lower than the same period last year.

While this is down significantly, it is a slight improvement from the over 50% decline projected in June. The slight boost has been attributed to lighter lockdown restrictions which came into effect during that month.

The group anticipates a R1 billion to R1.1 billion headline loss for the period, extended from a loss of R800 million recorded in 2019.

“June 2020 marked an improvement in sales in comparison to sales in prior months during the national level 5 and 4 Covid-19 lockdown periods,” the group said.

“Liquor, general merchandise and home improvement sales benefited from pent-up consumer demand, resulting in total sales for June increasing by 0.8% compared to the same period last year.”

However, this was still not enough to improve sales figures from last year. For the 26-week period ended 28 June 2020, Massmart’s total sales amounted to R39.6 billion, representing a decrease of 9.7% on the same period last year, with comparable store sales decreasing by the same level. Internal product inflation is estimated at 3.7%.

Total sales from South African stores for the 26-week period decreased by 10.6%, while comparable sales decreased by 10.5%.

“The Covid-19 national lockdown in South Africa had a significant impact on the trading performance of the Massmart Group. For the 9-week period from 30 March 2020 to 31 May 2020, total sales were R4.6 billion lower than the same period last year,” the group said.

Operating costs attributable to the execution of safety protocols in group stores – in accordance with regulated requirements – amounted to R62 million on a YTD basis, while the group added that other indirect costs related to the pandemic increased by R13 million.

Further, Massmart said its earnings are expected to be adversely affected by the impairment of the carrying value of some store level assets, as well as retrenchment costs relating to the announced closure of all of the Dion Wired and 11 Masscash stores.

A possible sale of the Masscash stores is also currently under review, it said. Mashcash includes: CBW, Jumbo Cash and Carry, Trident, Shield, Cambridge Food and the Rhino Group.

 

Why Takealot beats out Makro

Takealot is South Africa’s largest online shopping platform, with over 2 000 employees and sales of around R1 billion per month, according to MyBroadband.

Where Takealot succeeded: 

  • Takealot’s dominance is due to its logistics – the acquisition of Mr Delivery in 2014 gave the business ownership over its own logistics network through the Takealot Delivery Team division (formerly Mr D Courier).
  • Takealot offers unrivalled service levels and support
  • Takealot centralised its marketplace logistics, which means shoppers who purchase a product through its platform receive a consistent experience, independent of the seller.

Where Makro falls short:

  • Makro is a trusted brand with a national network of stores, exceptional buying power, and established logistics partnerships
  • Makro’s logistics fell apart – many online shoppers wait for weeks for their Makro orders to be delivered, and their support channels are a mess
  • Makro has a decentralised model which leaves it up to third-party sellers to send packages to shoppers.

 

Source: Supermarket & Retailer 

Retailer Massmart, whose brands include Makro and Game, says SA’s Covid-19 lockdown resulted in about R2.3bn in lost liquor sales in April and May.

This is based on comparable sales in 2019, the group said, as it warned the pandemic had worsened losses this year, though pent-up demand had helped sales as SA’s lockdown has eased from level 5.

The group said in a trading update that it expected its headline loss per share for the 26 weeks to end-June 28 to be at least 50% worse than the headline loss per share of 364.7c previously.

Total sales for the 23 weeks to June 7 2020 amounted to R34.8bn, which is 10.3% lower year on year. Sales from its SA stores amounted to R31.3bn, 11.5% lower than last year.

The group said operating costs in line with higher safety protocols amounted to about R50m, but that it was comfortable with its balance sheet, and had secured a R4bn intercompany loan from parent Walmart.

The retailer is implementing an organisational shake-up that has seen its four divisions reorganised into two business units. It said, saying on Wednesday it was continuing this plan.

Massmart Retail will comprise the Builders, Game, DionWired and Cambridge Food trading brands.

Massmart Wholesale will take in Makro, Shield and the group’s wholesale cash brands.

By Sibongile Khumalo for Fin24

Strained by operating under lockdown conditions since the end of March, the Wal-Mart owned Massmart is now seeking rental relief to manage its cash position.

The company’s stores such as Makro, Game and Builders Warehouse have only been allowed to sell essential goods during the lockdown period with the sale of alcohol banned under the current regulations.

“We will continue to proactively work with all suppliers and stakeholders to manage our cash position going forward including,” the company said in a trading update on Monday.

To save cash, it is “negotiating and participating in the rental relief package from the Property Industry Group”.

Various retailers have been hit by the shutdown or limited trading conditions and have been locked in rent negotiations with landlords, with property groups saying the lockdown is likely to have a negative impact on the commercial real estate, as Fin24 reported.

Massmart, which went into the lockdown already struggling under the weight of a sluggish economy and poorly performing Game stores, reported an almost 12% decline in sales for the 19 weeks to May 10.

The Covid-19 financial challenge comes on the back of declining profits as the group in 2019 reported a R861 million loss. This year it shut down its poor performing DionWired electronic stores and revealed that it would consider whether to close the 11 non-performing Masscash stores.

“We should also take into account that the company had lost a bit of market share before Covid-19 hit, the pandemic is now likely to delay their turnaround,” said Nolwandle Mthombeni, equity analyst at Mergence Investment Managers.

READ: Game, Makro and associated retailers freeze prices for essentials during lockdown

Mthombeni mentioned that the virus would have a “domino effect” on real estate as whole because landlords will now have to negotiate lower monthly rental with tenants who are battling cash flow challenges. The effect is also likely to extend to financial lenders as well, she said.

“Every single day of lost trade means income loss for retailers.”

Government has come under increasing pressure from various business organisations and political parties to open the economy, as companies continue to take a pounding from the restrictions.

South African has since moved to ease trade regulations as the country moved to level 4 of the lockdown and allowed the sale of winter clothing. By the end of the month, the country moves into level 3, which will allow for alcohol sales to resume, a significant category for retailers such as Massmart.

By Londiwe Buthelezi for Fin24

Last Thursday, all Makro stores across the country were shut following issues that caused disruption in the company’s trading system.

“Makro experienced some system-related issues this morning impacting our ability for stores to operate normally. This has now been resolved and all stores are operational … We would like to extend our sincerest apologies for the inconvenience caused to our customers,” said Makro Communications and Stakeholder Engagement Manager, Welisa Nene.

Makro tweeted an apology to customers at around 13:00 on 2 January.

“We apologise for the inconvenience caused while our stores have been closed today. We were experiencing a technical issue which has now been resolved. We are now open for trading,” it said.

Earlier in the day, customers were turned away at Makro stores in the Western Cape and Gauteng, while some remained in hopes that outlets would reopen soon.

Makro Woodmead in Sandton remained close past lunchtime, even though Makro tweeted that stores had reopened.

Massmart flagged the issue of downtime at Makro during the group’s interim results announcement in August. It said the system downtime was due to the implementation of a new system as the retailer switched from its legacy online system early in 2019.

But last year the downtime issues only affected online sales, which accounted for a mere 0.8% of all sales in Makro outlets. Signs at some of the stores on Thursday indicated that till points were also affected this time around.

Makro has 22 stores around the country trading in general merchandise, food and liquor. Nene confirmed that the downtime only impacted these 22 Makro stores across the country, and no other Massmart chains.

Will Walmart call it quits in SA?

According to a recent Business Day article, Massmart – who owns brands such as Game and Makro – is in trouble.

The company recorded a R550-million loss to June 2019, and investors have been told earnings will likely be less than 50% of what they were in 2018.

  • Walmart is the world’s largest bricks-and-mortar retailer. The company paid $2.3bn to buy 52% of Massmart in 2011
  • Walmart paid R148 a share, but today share prices stand at R44 – a 70% drop in value
  • Speculation is rife that Walmart may pull out of SA rather than buy the other 48% of Massmart
  • SA won’t be the first country Walmart has exited. It also gave up on Germany, Britain and South Korea, and is currently scaling back in Brazil
  • In 2010, Massmart generated cash of R2.6bn and paid dividends of R822.4m
  • By 2018, cash flow was at R2.8bn, and dividends marginally lower at R750m
  • Massbuild (primarily Builders’ Warehouse) would be an easy sell but it would be a struggle to find buyers for Massdiscounters (Game and DionWired) – stores that have been hard-hit by online competition
  • Other businesses in the stable are Masswarehouse (Makro and The Fruitspot) and Masscash, whose brands include Jumbo Cash & Carry and Cambridge Food
  • By 2020 it will be clear whether or not Walmart can extract value from its African conglomeration, or whether it breaks it into its pre-1990s components and sells them off.

Makro aims for sustainability

Since the Walmart deal, Massmart has struggled a bit, as Africa, with currencies shaky and commodities down, has failed to deliver immediately on the promise, and as ill economic winds buffet the local consumer.

Their 2015 results were not all that. But they’ve stuck to their guns in key areas, and this should make for steady improvement in the medium to long term.

One of these areas is sustainability, as embodied by the new Makro, the first to make use of renewable energy, in Carnival Mall, Jozi, where solar panels will produce 1-million kWhs of electricity every year, only a little of which will be consumed by the LED bulbs which make up 100% of the store floor lighting.

Daylight will be harvested, and refrigeration will be provided by high-performance CO2 plants.

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