Walmart-owned Massmart plans to invest heavily in its online sales platform, saying that in the months since lockdown started it had experienced a 100% increase in e-commerce sales growth compared to the same period last year.
In an exclusive interview with Business Times, Mitchell Slape, the American brought in by Walmart to turn around the fortunes of Massmart, said: “Our e-commerce business, and this is true in our various formats whether you think of Builders Warehouse or Makro or Game, is up significantly. We are running, even as we went into May, triple-digit increases over the prior year in terms of sales growth.
“What we are mainly concerned about with e-commerce is really creating the right type of customer experience. I would openly admit we have the opportunity to get far better at that and it's something we talk about a lot and which I'm very focused on.”
Slape, who has been CEO since September last year, said that although he is not able to disclose the exact amount that will be invested in the online platform, it is “one of our highest priorities”.
“It's going to be one of the top areas that is going to receive funding, for sure.”
Massmart has previously come in for criticism from market commentators who said it had lost out to companies such as Takealot, with customers browsing in Game and other outlets to compare prices but then going back home to buy products online from competitors.
But this investment in the online platform does not mean Massmart is going to neglect its physical stores, with Slape saying that foot traffic is improving as the lockdown regulations are eased.
“The other interesting dynamic we are seeing as well is that customers really like getting into store.
“I think there was this assumption that people were just going to hibernate at home and do all their shopping online, but I think there is actually this need to get out and have social connections and interaction and some level of human contact, and I think that is why the store continues to maintain a lot of relevance.
“As we've continued through level 4 and now level 3 we are seeing good traffic in our stores. I think that the opportunity for us is to really build out our omni-channel presence, where we give customers the ability to shop where and how they want to, whether that's online, or whether that's in-store, or whether that's pick-up or whether that's delivery. I think we really have an opportunity to develop out that business and it is one that Walmart has really driven hard in the US.”
Asked whether the US retail giant may want to exit Massmart after years of poor performance, Slape said that although he can't speak on behalf of Walmart, he can say that his mandate as CEO hasn't changed.
“What I have said repeatedly is the mission is to go and make this company the strongest and healthiest retailer in Africa, with the best long-term prospects.
“One of the other interesting things that happened very early in the process was I took the entire executive team to Walmart's headquarters in the US and I think it was the first time it had happened.
“We just spent a full week learning everything we could about what Walmart was up to, what they were doing, and we came out of that with this concept that we use to this day, which is we need to be powered by Walmart.
“We need to take advantage of being a part of this fantastically successful retailer.
Massmart’s loss in 2019
— R1.3bnMassmart’sloss in 2019
“We leverage Walmart quite heavily and we continue to pull the best of what we can from that business and all the help that we can get into our business to make it more successful. All those things tell me that the mandate hasn't changed, the support from Walmart hasn't changed.”
On whether Covid-19 will disrupt his efforts to revive the fortunes of Massmart, Slape said the group has to “continue the rhythm of the turnaround plan”.
“In fact, if anything it means that there are opportunities for us to accelerate in some important ways. Certainly one of those is how do we escalate our effort around cost savings? We have been making good progress on cost savings. In the first quarter we were able to leverage expenses in the business and as we went into Covid we found opportunities to save costs.
“Obviously, some were created by Covid itself. We weren't able to travel as much. We had to leverage technology. What has happened with cost savings, everything we have been working on got accelerated. We continued to negotiate rentals, for example, we continued to work with suppliers.”
The strategy for Game remains the same, with Slape saying the chain has “brand relevance in so many categories” and that the plan is to build on that. Some analysts have argued previously that Massmart should look to offload Game because it was a major contributor to the group's R1.3bn loss in 2019.
Slape said the group is working hard on improving the shopping experience at Game as well as getting the right assortment of goods in place. It is going to remove its fresh and frozen foods from most of its stores and reconfigure them to include clothing that fits in with the other goods on offer. It will still stock dry groceries.
This has already been done at the Game store in Mall of Africa, but Massmart plans to roll this out across other outlets over the next year.
“It's basic apparel, it's not fashion-orientated, it's basic T-shirts, jeans, workout wear, things that tie in well with the rest of the Game assortment. We are a destination for sporting goods, a destination for back-to-school goods, so serving the basic apparel needs in a way that complements the other categories that we have in the store.”
