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.
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.
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.