Merchandise proposition:
General Merchandise discounter and
Food retailer
 
153
stores
(143 stores in 2013)
14,214
full-time employees
(12,870 in 2013)
 
4
BBBEE score
(Level 3 in 2013)
Massdiscounters continues to retain its recognition level with an A rating. There has been an increase at the management level and a score of 14.42 out of 15 was achieved on Employment Equity. Maximum scores were achieved on both CSI and Enterprise Development.
 
5-10
Game
8-10
DionWired
 
Geographic presence:
South Africa, Botswana, Ghana, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Tanzania, Uganda, Zambia
Massdiscounters operates through two retail formats: Game and DionWired.
Game is a discount retailer of General Merchandise and non-perishable and dry groceries for home, leisure and business use, operating throughout South Africa and in 14 cities in sub-Saharan Africa. Traditionally Game has been a discounter of General Merchandise, but our format renewal, with the introduction of fresh Food, has intentionally pushed the brand towards a multi-category format. Currently 66 Game stores provide a perishable food offering adding further everyday value to our customers. Over the next few years, we intend to roll out perishable food to most Game stores. Game Liquor was included with the format renewal to complete our offering and increase foot traffic. We now have 39 Game Liquor stores, which are performing in line with expectations.
DionWired’s product displays create an easy, exciting and interactive shopping experience, offering the latest in-home entertainment, computing, video and digital photographic equipment and appliances. DionWired sells complete technological solutions, often demonstrating the interconnectivity of the latest innovations and products in-store. The Tech experts manning our in-store Hi-tech Smart service centres are on hand to offer the best advice and onsite repairs and services.
 
Value proposition
Game’s positioning is to offer customers the widest range of branded products, at the best price for a given set of product specifications and a quality guarantee for customers. We ensure that customers are assured of the best value at every logical price point. The Game trading model is promotionally- driven, with five million copies of our bi-weekly promotional leaflets distributed in South Africa. By working closely with our suppliers and benchmarking ourselves against competitors, we are able to offer our customers well-priced products representing great value.
DionWired’s main proposition is to offer the widest range of some of the world’s leading and discerning brands such as Apple, Smeg, Marantz, Bose and Onkyo to the South African higher-income consumer.
 
Highlights
  • Held or gained market shares in key categories in Game
  • Fastest growing Formal Food Retailer in SA in 2014
Improvements
  • Significant growth in both sales and margin of our Food and Liquor offering
  • Improvement in our South Africa business during Q4
  • Moved from our historical four day promotion period to a longer 10-day period
Challenges
  • Tough South African economic environment pressurising our core middle class customer
  • Slowing African economies from weaker global prices for resources and strong US dollar
  • Planned roll-out of SAP Point-of-Sale system across all stores in South Africa, commencing in early 2016.
Financial performance
Sales
R17,955.2m
Up from R16,294.2m in 2013
23% Massdiscounters 27.6% Masswarehouse 13.8% Massbuild 35.6% Masscash
Trading profit before interest and tax
R180.7m
Down from R326.9m in 2013
8.8% Massdiscounters 50.6% Masswarehouse 26.1% Massbuild 14.5% Masscash
Key sales drivers
  • Product deflation/inflation
  • Price/value perception
  • Interest rates
  • Consumer confidence and disposable income
  • New stores
  • African economic strength
Product inflation
3.1% 
0.5% in 2013
+10
stores
Total assets
R7,985.5m
increased from R7,718.3 million in 2013.
Total liabilities
R7,820.9m
increased from R7,522.2 million in 2013.
Net capital expenditure
R542.2m
Up by 10.7%
increased from R489.7 million in 2013.
Increase in trading space
6,5%
Trading area 506,188 m2
Trading area 475,331 m2 in 2013
DC space 178,488 m2
DC space 178,488 m2 in 2013

 

Divisional strategy

Strategic focus for 2015 is to deliver real value to our core customer by delivering on our brand promise of:

  • Consistently low prices
  • Focused ranges – which meet all our customers’ household needs under one roof
  • Guaranteed quality

which is supported by:

  • Consistent stock availability
  • Well designed and merchandised stores
  • Passionate and enthusiastic customer service

and enabled by:

  • Efficient supply chain, systems and processes of omni-channel strategy
Future outlook

At Game we will continue to roll-out fresh food and refurbish our stores, while slowing the number of new store openings in South Africa whilst increasing the Rest of Africa footprint.
We will continue to consolidate the Hi-Tech and Multimedia categories expanding the space allocated to Food and selected Homeware categories. A further twenty Liquor stores are planned.
At DionWired we intend to focus on reinvigorating the customer experience by focusing on our core purpose “to simplify life by obsessively sharing the joy of technology”.

Investing in our community

Massdiscounters is committed to playing a meaningful role and to being a socially responsible corporate citizen. This commitment is rooted in our investment in the social development needs of the countries in which we operate. The focus of our corporate social investment is primarily in education, where we assist in basic literacy, school infrastructure and assistance to the poorest of the poor.

Key projects in 2014 which helped us change the lives of over 100,000 children are:

  • Game Amalunchbox
  • Game Tools 2 Teach
  • Game/Vodacom Wheelchairs
  • Game Fights Malaria with the Kingsley Holgate Foundation
  • Lungisisa Indlela Village
  • DionWired Smartboard
  • The Ubuntu Community Chest
Investing in our human resources

Massdiscounters received full accreditation as a training provider by the Wholesale and Retail Seta. In 2014:

  • we recorded a spend of over R50 million in training black staff with more than 50% of the spend allocated to the development of black female staff.
  • we had a 35% representation of black females in senior management positions and 34% of all promotions were black females.
  • we contributed more than a R250,000 in bursaries to the children of our team and created a staff purchase facility which benefits more than 1,800 of our team members.

The wellness of our team is vital to our staff engagement and customer engagement initiatives and the attendance of staff at our wellness days and use of the Employee Assistance Programme facilities was indeed noteworthy with many stores receiving gold stars.

Investing in the environment

Massdiscounters has embarked on a number of energy saving initiates to reduce our impact on the environment:

  • In all new DionWired stores we have moved from inefficient metal halide high bay fittings to 100% LED lighting resulting in an approximate saving of 75% in energy consumption.
  • We have redesigned the DionWired stores and introduced ceilings to reduce the cubic volume of the store area. This has resulted in a reduction of the cooling volume of 30% and a reduction of cooling capacity of between 10% and 15%.
  • A retro-fit program is in place in Game stores where inefficient light fixtures are replaced with energy efficient T5 fixtures resulting in an average saving of 280,000 kW/h per store per year.
  • Building Management Systems are included in all new Game stores. Where possible skylights are also included which allows for daylight harvesting where the BMS system automatically switches lighting off to maintain the appropriate lux levels. This results in a calculated saving of 180,000 kW/h per store per year.
  • In new stores, occupancy sensors are included in office areas to automatically switch off lights when offices are unoccupied.
  • Working with industry experts to design the most efficient refrigeration systems, making use of variable speed drives, multiplex systems and electronic expansion valves to drive down energy consumption by between 10 and 15%.
  • In smaller format Game stores, refrigeration is installed with glass doors to improve the efficiency of the jumbo cabinets.

 

We continue to look for new opportunities to improve our design and equipment to create the most energy efficient stores possible.

Directorate

Guy Hayward Chairman, Robin Wright Chief Executive Officer, Nazim Cassim DionWired, Norman Drieselmann Financial, Richard Fuller Store Operations,
Norman Gray Non-executive, John Hart Planning, Mark Huxtable IT, Andrew Jackson Merchandise, Rogany Ramiah Human Resources, Mike Spivey Non-executive,
Mark Turner Marketing, Alan van der Bergh Food, Johannes van Lierop Non-executive