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Our business performance

Massmart Wholesale comprises Makro, Cash & Carry, Shield, The Fruitspot, Massfresh Meats and Wumdrop. Makro sells Food, Liquor and General Merchandise categories, catering for retail, commercial and wholesale customers. Cash & Carry sells Food, Liquor and General Merchandise categories and includes the brands CBW, Jumbo Cash & Carry, Sunshine, Trident, Eureka and Saverite. It caters for Commercial and Wholesale customers. Shield (a voluntary buying association) services wholesale and independent trader customers. The Fruitspot is a Wholesaler and distributor of fresh and cut fruit and vegetables in Gauteng, KwaZulu-Natal and the Western Cape. Massfresh Meats is a processor, distributor and wholesaler of fresh and processed meat products. Wumdrop provides crowd-sourced final mile delivery services to individuals and corporates.

2020 strategy

Successfully implement our integration of Makro, Shield and Cash & Carry to form the Massmart Wholesale business unit

Leverage our assets to position us as the most attractive route to market for our suppliers

Continue to grow our market shares by offering a clear customer value proposition comprising a combination of great value with the EDLP proposition, excellent customer service, a compelling range and high product availability

Continue to develop our e-commerce solutions, with a focus on wide-assortment general merchandise, including the Makro Marketplace, and high service, scheduled delivery of Food & Liquor in partnership with OneCart

Improve our business customer satisfaction scores by improving our stock availability and on time and in full service levels

Leverage Group procurement scale and supply chain effciencies to reduce cost of goods and further protect our low-cost operating model

Continue our focus on the Cash & Carry stores by driving proftable sales, maintaining in-stock service levels and restoring credibility with customers and relevance with suppliers

Our progress during the year

  • Created a single Massmart Wholesale executive team, with a mandate to complete the integration of the businesses, improve operating efficiencies and eliminate unnecessary costs
  • By optimising product and promotional mix, improving trading disciplines, together with a price strategy founded on an EDLP proposition, we improved margins in all areas of the business. Notable is the improvement in Cash & Carry gross profit margin of 120bps year-on-year
  • Improved free cash flow by 60% to R1.59 billion
  • Responded to the Covid-19 crisis by prioritising the safety of associates and customers, while providing customers with products they need to keep their families safe and entertained at the low prices they have come to expect from us
  • Customer net promoter scores improved by 10 points in stores and 20 points online
  • Created a single team leveraging scale to reduce costs and enhance customer value, which contributed to the Cash & Carry business generating a trading profit of R172 million compared to a R75.2 million trading loss in the prior year
  • Fuelled by the demand for safety and convenience there was a strong push towards e-commerce, particularly in Grocery. Makro grew online sales by 40.2% during the period with online traffic growing by 41.8% to 24.4 million visitors during the year
  • Makro partnered with OneCart, an on-demand platform, to provide a convenient solution to retail customers’ shift to shopping close to home. This enabled the sale and delivery of over 11,000 grocery items and 124 liquor items
  • Integrated Shield into Massmart Wholesale, creating the ability for Shield members to use their Shield accounts in Makro stores, introduced liquor as an offering to Shield members and deepened our range in DIY
  • Completed a detailed portfolio review and announced the divestiture of non-core/nonstrategic Cash & Carry store assets

The challenges we faced

  • While our exposure to commercial and hospitality customers, primarily in Makro, impacted overall sales during the Covid-19 pandemic trading restrictions, the ability of our Cash & Carry stores to reliably serve their local communities throughout the crisis resulted in significant sales growth in categories that they were allowed to sell during trading restrictions
  • During 2020 various trading restrictions resulted in Liquor sales, during normal trading hours and conditions, only being permitted for one third of the year. Despite this, through careful planning and disciplined execution, we managed inventory and margins, and reopened a number of times during the year without incident
  • The customer trend of shopping locally presented a challenge, as did the big-box nature of our stores. We continue to invest in protocols to keep everyone safe and to provide a trusted environment, while adhering to the government regulations pertaining to social distancing, ventilation and facility occupancy levels

Our strategic focus going forward

  • Complete the integration of our businesses by creating merged teams across all functions, extending the Makro point of sale and ERP systems and infrastructure to all Massmart Wholesale stores
  • Extend our EDLP proposition further into the business, so we continue to save our customers money so they can live better and run better businesses
  • Build on the momentum in Cash & Carry stores to deliver sustainable levels of profitability, reducing reliance on low margin Food & Liquor by expanding the General Merchandise range, and making our stores more accessible to retail customers
  • Accelerate e-commerce through a clear focus on the customer journeys that we seek to win in, including General Merchandise, where we have category leading shares.
  • Launch the next phase of assisted, accelerated check out at relocated Makro Gqeberha store, which include the roll out of the Makro Express Checkout app, which allows customers to scan and pay for items on mobile devices
  • In Shield we plan to allow members to purchase across all Builders Warehouse, Express and Superstores
  • Pilot a standalone ‘Powered by Makro’ liquor store format
  • Complete the divestiture of non-core/ non-strategic Cash & Carry store assets

Future outlook

We anticipate the uncertain trading environment exacerbated by the unpredictable outcome of the Covid-19 pandemic to continue and will work closely with our family and business customers to support their recovery from the impacts of the pandemic-related restrictions. Massmart Wholesale remains focused on our mission of saving families and small businesses time and money so that they can live better lives and run better businesses. We will do this by maintaining positive price gaps against the market, combined with our focus on EDLP; giving our customers the peace of mind that they will get everything they need, in one place and at the low prices they have come to expect of us.