Massmart is pushing for a complete overhaul of its operations in South Africa after counting losses as high as R1.4 billion in 2019.<\/p>\n
In a presentation to investors published on Thursday (30 January), the retail and wholesale group laid out its road map for the business going forward – with the planned closure of Dion Wired stores just the start.<\/p>\n
According to the group, its sales growth has been under continued pressure since 2013, with sales contracting for the first time in 2018.<\/p>\n
Earnings before tax have been depressed since the global economic crisis in 2008, and in 2019 it expects losses to reach between R1.2 billion and R1.4 billion<\/a><\/strong>.<\/p>\n “The business has the portfolio to achieve historic EBIT performance. To achieve this, though, we require urgent and deliberate intervention,” it said.<\/p>\n The group said that it has a strong portfolio of trusted and respected brands, but it has not operated with any focus for them.<\/p>\n Adding to this, the different segments have worked in silos, leading to duplication of some functions, and limited or no collaboration between different brands.<\/p>\n This is what it now plans to change – starting with a restructuring of the disparate businesses, and assessment of which brands are working, and then rebuilding the brands that remain.<\/p>\n As of 1 February 2020, the group said that it will be consolidating its four divisions \u2013 Masscash, Masswarehouse, Massbuild, and Massdiscounters \u2013 into just two units.<\/p>\n Dion Wired and Game<\/strong><\/p>\n Massmart has noted a significant performance deterioration in Game stores, and an extreme under-performance in Dion Wired, which has resulted in poor customer experience, declining financial results and pressure on other businesses in the group to compensate for this.<\/p>\n In January, the group identified 23 Dion Wired stores and 11 Masscash stores which are flagged for closure<\/a><\/strong>.<\/p>\n The outcome of this depends on how the retrenchment process goes, but the group said that the decision to shut the stores came after a comprehensive review of its portfolio.<\/p>\n The same review has led the group to look at Game stores, and how it fits into the bigger picture.<\/p>\n Speaking to MyBroadband<\/a><\/strong>, Massmart has already indicated that – should the Dion Wired shut down go through – Game stores will take over the servicing responsibilities of products bought at Dion Wired, hinting at Game’s future role in the group.<\/p>\n However, according to the group’s presentation, Game will also have to be overhauled, in what it calls going “back to basics”.<\/p>\n “Game’s customer value proposition is unclear, with a lack of resonance in key growth segments,” it said.<\/p>\n There is a lack of coherence in its offering, an over-reliance on promotions, and certain segments – like fresh and frozen foods – which are just not working.<\/p>\n To counter this, the group wants to phase out frozen foods, movies and music at Game, and reintroduce others, like clothing and apparel basics.<\/p>\n It also wants to boost multimedia products, baby products and introduce new categories, like health and wellness.<\/p>\n This will be on top of its other plans to address customer service levels, stock issues and overheads, which extends to the other brands within its portfolio.<\/p>\n “The landscape has changed, and we have been slow to adapt. But we are now changing, and we’re acting with urgency,” the group said.<\/p>\n You can view the whole investor presentation below:<\/p>\n Massmart – Road to Recovery<\/a> by BusinessTech<\/a> on Scribd<\/p>\n\n
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