Massmart has already closed down many of its underperforming Game stores, and its new strategy may see many more disappear.

In March 2022, former Massmart CEO Mitchell Slape said they were divesting from East and West Africa stores and 15 South African stores.

Six months later, Game said it was closing or selling thirteen underperforming stores nationwide.

The Game stores earmarked for closure included many prominent locations in Gauteng, the Western Cape, Eastern Cape, KwaZulu-Natal, and Mpumalanga.

These store closures did not come as a surprise. Game has been struggling for years with mounting losses.

Despite numerous turnaround strategies, the retail chain did not achieve what management promised shareholders.

Massmart’s financial results before de-listing from the JSE on 22 November 2022 showed Game made an annual loss of over R1 billion — nearly double the previous year.

It was clear that the previous promises of a turnaround did not materialise and that drastic measures were needed.

Following the store closures in 2022, Massmart has launched a new initiative to address its struggling Game retail chain.

In April 2024, Massmart announced a pilot programme to replace Game stores in malls with small-format Makro stores.

The smaller Makro stores will be situated on the Game store site. They will be merchandised and branded as a small concept 3,000-square-meter Makro store.

Makro did not reveal where it planned to launch the pilot, saying the locations would be announced later.

Group corporate affairs head Brian Leroni said the objective is to make Makro stores more accessible to a wider market. It is also an important part of Makro’s omnichannel strategy.

Leroni said the concept’s development was at an advanced stage and has been tested with focus groups.

“We have been delighted by strong expressions of support from landlords, suppliers, consumers, and our own staff,” he said.

Massmart is now involved in the practicality of rolling out the test stores and anticipates completion early in the second half of the year.

Evan Walker, portfolio manager at 36ONE Asset Management
Evan Walker, portfolio manager at 36ONE Asset Management

Unbeknownst to many South Africans, this strategy is nothing new. It was considered ten years ago but never materialised.

Evan Walker, portfolio manager at 36ONE Asset Management, said the plan was not implemented because the previous Massmart management saw value in the Game brand.

Walker said the plan to launch smaller-format Makro stores makes sense. “It is a very good business with a strong brand,” he said.

36ONE Asset Management supported the strategy of converting Game stores into small-former Makro stores ten years ago. Walker said it still makes sense.

“The combined Makro and Game store turnover have a lot more critical mass from a marketing and pricing perspective,” he said.

“The only way they will be competitive is through price, especially against e-commerce players like Takealot, Amazon, Temu, and Shein.”

He added 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.

“We have seen what Checkers has done with Sixty60, and Makro has to match that on the retail component,” he said.

Makro used to be a wholesale specialist, which required customers to be business owners with a Makro card.

However, this is changing. It has become much easier for everyone to shop at Makro, and the company is looking to do away with cards in its new small-format stores.

“With the new small format stores, Makro is getting closer to retail customers from a retail and online perspective,” he said.

Walker said the success of small-format Makro stores depends heavily on price. “Depending on where the pricing strategy is pitched at the retail level, it could be a very competitive offering.”

“It all depends on whether they can make their pricing strategy work in the smaller stores and reduce their cost base to support the lower-cost margin.”