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Masswarehouse

Masswarehouse comprises Makro and The Fruitspot. Makro sells the Food, Liquor and General Merchandise categories, catering for personal, commercial and trading customers. The Fruitspot is a Wholesaler and distributor of fresh and cut fruit and vegetables in Gauteng, KwaZulu-Natal and the Western Cape.
2018 strategy
Makro saves customers time and money so they can fulfil their aspirations of living better lives and running better businesses. We will therefore:
Grow our market shares in the General Merchandise retail and commercial channels, and in the Food and Liquor retail and hospitality channels
Implement SAP Hybris ecommerce and fulfilment platforms to accelerate our growth in ecommerce to retail and commercial customers
Retain our focus on the customer value proposition by offering the best balance between price, quality and quantity
Continue to invest in our people, through training and development, and by offering leadership opportunities and talent acquisition
The progress we made
  • In 2018 we made good progress in the three key strategic pillars of delivering organic growth, with strong foundations and through low-cost operations
  • Maintained strong market shares in Durable Goods, Food and Liquor
  • Makro enjoyed strong sales performances from themed promotions, and enjoyed double-digit growth from our Easter, Black Friday and Festive Gifting promotions
  • The Gross Merchandise Value of online sales grew by 26%, supported by strong growth in sales on our Marketplace seller portal
  • The Makro online platform is now the highest contributing sales site in a number of our product categories
  • Reduced our cost-base through improved operations, lower costs and less waste
  • Increased our mRewards loyalty programme membership base by 58%
  • Expanded locker network by 160% to 191 sites nationwide
  • Created permanent jobs for nearly 2,000 temporary staff, bringing the total number of new permanent jobs created to 4,500 over the last four years (including new stores)
The challenges we faced
  • Economic uncertainty in South Africa impacted weak consumer demand
  • Severe price deflation in commodities like maize, wheat, oil, sugar and rice for the majority of the year
  • The incomplete national road infrastructure in the vicinity of our new Riversands store (north of Johannesburg) impacted that store’s performance
  • The April 2018 VAT increase caused a significant drag on consumption demand
  • Poor consistency and reliability of supply of some goods, particularly in Food and Liquor, resulted in lost sales opportunities and higher than optimal working capital investments mitigation
  • Our gross margin was impacted by negative adjustments for inventory and cost of sales in Massfresh. This unsatisfactory development came to light in November 2018
Our strategic focus for 2019
  • Together with the existing strategic priorities (being good organic growth, with strong foundations and through lowest costs) we will focus on simplifying the business to improve speed and reduce waste
  • Successfully open our 22nd South African store in Cornubia, north of Durban in late March 2019
  • The new Hybris web and fulfilment platform was launched in early February 2019. This will significantly improve our online offering and fulfilment but came with the expected early teething troubles
  • Make use of technology in the areas of analytics, store operations and ecommerce to support our strategic goals, and to support our people to better serve our customers
  • We will continue to grow our retail market shares and maintain market shares in the Wholesale channels by offering a clear customer value proposition comprised of a combination of value, range and availability, and by allowing customers to shop with us in a true omnichannel manner
Future outlook
Makro remains focused on making life easier for our customers. We will do this by offering products and brands that our customers know and trust, at prices that save them money so that they can fulfil their aspirations of living better lives and running better businesses, across multiple channels and in a way that saves them time. At The Fruitspot, we will stabilise and grow the business by ensuring it becomes a supplier of choice to the retail and hospitality industry, and within the Massmart Group.

South African retail and wholesale consumer confidence remains low and so we anticipate a difficult sales environment in 2019. The impact of no product deflation will positively impact sales, as will sales from the new store.