Massmart Set to Replace Game Stores with Small-Format Makro Outlets
Massmart is set to replace Game stores in popular shopping malls with small-format Makro stores, as announced in April 2024. However, the company has not provided any details about the progress of the trial.
Massmart’s Senior Vice President of Group Corporate Affairs, Brian Leroni, explained the reasoning behind choosing Game stores for the trial. He stated that finding suitable retail space in popular shopping malls is a significant challenge when developing a new concept store. To overcome this, Massmart decided to test the concept in existing Game store sites located in popular shopping malls.
This move has sparked speculation that the small-format Makro store trial is to assess whether it is viable to convert all Game stores to Makro outlets. Game has underperformed for years and has been a thorn in the flesh for Massmart, owned by the global retail giant Walmart.
Massmart owns numerous well-known retail brands, including Game, Makro, Builders Warehouse, Jumbo, and Shield. While Makro and Builders Warehouse have performed well in recent years, Game has dragged the company down. Massmart’s results before it was delisted from the JSE in 2022 revealed that Game experienced a huge sales decline.
Evan Walker, portfolio manager at 36ONE Asset Management, highlighted that the plan to replace Game stores with Makro has been on the cards for a decade. However, the previous Massmart management saw value in the Game brand, and the plan did not materialise. Walker supports the initiative, stating that Makro is a very good business with a strong brand across the country.
He said that converting Game stores into small-format Makro stores will increase Makro’s walk-in customers and expand its distribution network. Makro has a strong e-commerce focus, and having more stores to serve as distribution centres will strengthen its online shopping capabilities.
Massmart Denies Plans to Replace Game with Makro
However, Massmart’s Leroni denied that the trial aimed to assess the viability of replacing Game stores with small-format Makro stores across South Africa. He stated that the company’s objective is to make Makro stores more accessible to a wider market through a small, mall-based Makro store concept.
He added that the objective is not to convert Game stores into Makro stores and that there will be no job losses. However, he admitted that there was strong demand for small-format Makro stores in Game locations. The project’s objective was to test the small format’s executability and consumer response to convenient access to Makro rather than to close Game stores.
If the concept is successful, Massmart will follow its normal real estate procurement processes to secure the sites most suited to the format. However, this sounds like corporate speak, trying to hedge its bets should the trial fail. Daily Investor asked Massmart for an update on the project, but the company preferred not to comment.
