The Massmart Group has announced a number of potential store closures and retrenchments at Dion Wired and Masscash stores as it cuts down on under-performing outlets.
In a shareholder announcement on Monday (13 January), the group said that it recently conducted a store optimisation project that highlighted a number of under-performing stores in its portfolio.
“Consequent to this project the Massmart Group seeks to advise shareholders that Massmart has commenced, a potential store closure consultation process in terms of section 189 and section 189A of the Labour Relations Act 66 of 1995, as amended; with organised labour and other relevant stakeholders,” it said.
“A total of 34 Dion Wired and Masscash stores and approximately 1,440 employees are potentially affected by this process.”
Massmart currently employers approximately 12,000 employees across its group which includes brands such as Makro, Game, Builder’s Warehouse and others.
DionWired sales have come under pressure as low consumer confidence has affected sales of high price-ticket electronic items.
Declining customer traffic into major shopping malls where some larger Dion Wired stores are based, has also impacted sales.
Massmart reported a R396.1 million loss for the 26-week period ended June 2019, for its massdiscounters division, which includes Game and Dion Wired.
Following his appointment as Massmart chief executive officer in September 2019, Mitchell Slape laid out a shift in strategy at the group in a bid to turn the business around.
This involved a two-prong strategy, specifically looking at ways for Massmart to get the best deals for customers from its suppliers, as well as a so-called ’50x rule’, which stipulates that “for every rand spent at the head office, Massmart stores have to generate R50 in sales to recover this cost.”
Regarding the future of Massmart, Slape indicated that he and the group’s management team were working on a turnaround plan that would include revitalising customer value proposition.