Makro and Game have both seen a significant increase in online sales over the past year, according to Massmart’s financial results for the 52 weeks ended 27 December 2020.
The group as a whole reported a 5.5% increase in trading profit before interest and tax to R1.2 billion, as well as a 32.4% increase in free cash flow.
“Online sales were a key highlight during the period, growing at 58.6% and delivering R1.1 billion in Gross Merchandise Value (GMV) across all Massmart trading banners,” the group stated.
“This performance was characterised by 72.9% growth in unique customers, and 69.5% increase in click and collect order fulfilment.”
This phenomenon was prevalent across Builders, Game, and Makro, with the retail operations recording the following increases in online sales:
- Builders – 111%
- Game – 77%
- Makro – 40%
Makro and Game
Massmart said that at Makro, shifting consumer patterns emerging from the lockdown led to an increase in retail customers and a reduction in wholesale and commercial customers.
Makro also partnered with OneCart during the period, which further enabled the sale and delivery of over 11,000 grocery items and 124 liquor items.
No Makro stores were opened or closed during the period.
Game recorded a 15.5% decline in total sales compared with the same period last year, and it also reported a 36.2% trading loss.
Massmart attributed this to lockdown trading restrictions as well as reduced mall foot traffic and adjusted trading hours.
“Lost sales from the COVID-19 pandemic impact is estimated to be R0.9 billion,” the company said.
A single Game Store was closed over the 52-week period.
Dion Wired closure and turnaround plan
In its last financial year, Massmart closed 23 DionWired stores around South Africa, exiting the brand entirely as part of its turnaround strategy.
Other changes included stopping the sale of fresh food and launching clothing sales at Game, as well as outsourcing app development and support to SAP and Walmart India Development Centre, respectively.
“In January 2020 Massmart announced a turnaround plan to stabilise performance,” the company said.
“Since that announcement, the group has successfully delivered more than 30 turnaround projects that have delivered R600 million in total expense savings, contributed to margin uplift and significantly improved overall effectiveness.”
The company is also prioritising investment in mobile-first online shopping solutions and specific merchandise categories, namely general merchandise, DIY, wholesale food, and liquor.
As part of this new strategy, Massmart said it has appointed Barclays to sell the company’s interests in Cambridge Food, Rhino and Massfresh.
These retailers employ 7,000 people and comprise 57 stores, three fresh produce facilities, and one meat processing plant.
The infographic below shows the current structure of the Massmart Group.