Integrated Annual Report 2021
Integrated Annual Report 2021
Our strategy:
Stabilise and Focus
Invest
1
Stabilise
Through strong execution
of our Turnaround plan
2
Focus
Divest non-core assets to drive
sustainable proftable growth
3
Invest
Accelerated growth in
e-commerce, key categories
and geographies
1
Stabilise
Through strong execution
of our Turnaround plan
2
Focus
Divest non-core assets to drive
sustainable proftable growth
3
Invest
Accelerated growth in
e-commerce, key categories
and geographies
Group operating model Completed the reorganisation of the business to establish a low-cost, customer-first structure with two business units served by centralised support areas. This has set us up to sustainably leverage scale to minimise costs and optimise growth opportunities

 

Read more detail on

Our people

Our Supply Chain

Our omnichannel offering

Portfolio optimisation Creating a portfolio geared for sustainable future growth through exiting non-core businesses, markets and stores

  • Divested the DionWired banner in 2020 (23 stores)
  • Divested 11 under-performing Cambridge and Cash & Carry stores
  • Completing the divesture of the Cambridge, Rhino and Massfresh businesses and assets (discontinued operations)
  • Completing the divesture of 12 Cash & Carry stores
Reinvigorating Game Executing greatly enhanced CVP combined with structural interventions to fortify the core business

  • CVP interventions demonstrating solid performance uplift:
    • Removed Fresh and introduced basic apparel in Game South African stores
    • Relayed all 114 South African Game stores
  • Nearing execution of sale of 14 East and West African stores
  • Divestment process underway of 15 non-core South African stores
  • Structural interventions underway to further reduce overhead costs to build on expense reduction of 5.8% in 2020
  • Reinforcing focus on key customer destination categories
  • Accelerated omnichannel offerings
    • Increased online shoppable range to 78.5% (up from 52.5% in January 2021)
    • 72.0% increase in online sales growth
    • Gross Merchandise Value increased by 56%: orders increased by 113% and revenue increased by 47%
Wholesale integration Integrating our Wholesale business to build on our market leading position

  • Progressed IT unification project, on track for full implementation in 2023
  • Successfully implemented organisation restructure to gain greater productivity and efficiencies from a single Wholesale team across merchandise, marketing, finance and operational excellence
  • Successfully completed the CEO leadership transition of the business unit

 

Read more detail on our Massmart Wholesale review

Supply Chain optimisation Delivering an integrated Supply Chain to unlock Group leverage benefits to achieve cost-effective on shelf availability and enable omni-fulfilment

  • Consolidating our network into three state-of-the-art omni DCs
  • Implementing a one best way approach, leveraging Walmart supply chain expertise and capabilities
  • Centralising volume through our DC network

 

Read more detail on our Supply Chain

Cost reset Fundamentally changed the cost base, embedding sustainable cost management practices and delivering on our R1.8 billion saving ambition

  • R1.6 billion in total SG&A savings unlocked against R1.8 billion three-year ambition
    • leading to reduction of addressable spend from R10.4 billion to R8.6 billion
  • Cost of goods sold savings of R185 million secured through data-driven negotiations
  • Identified additional cost savings through our Group GNFR Procurement team

 

SOURCES OF EXPENSE SAVINGS:

27% Site services & supply costs

21% Other (e.g. travel, marketing, professional services)

20% Rent (real estate)

13% Utilities

11% Transport

8% Technology infrastructure

 

Pursuing growth opportunities in General Merchandise, Home Improvement and Wholesale Food and Liquor market leadership

 

Accelerating e-commerce

Investing to become a leading B2C & B2B e-commerce destination

50-65% GMV growth potential (compound annual growth rate)

  • Leading websites and applications: 15% e-commerce participation rate*
  • Leading on-demand/last mile platform: 65% of deliveries within 1 day*
  • Leading marketplace: 65x growth in shoppable range*

*Five-year target

 

Capitalise on our Home Improvement leadership

Refresh our stores and expand into untapped markets with our proven multi-format offering

R1.9 billion – R2.9 billion sales growth potential*

  • Refresh our in-store experience by remodelling >55% of our stores: sales uplift potential of ~5% per store (format dependent)
  • Expand our reach by growing our footprint by ~50%: growth potential R1.6 billion – R2.5 billion
  • Win in trade by disrupting building material retailing: 10% growth potential

*Remodels and new stores

Elevate our winning Wholesale Food and Liquor Position

Leverage our cost advantage to capture untapped informal and formal market opportunities and strengthen our reach

R11 billion – R14 billion sales growth potential

  • Refresh our in-store experience by remodelling >50% of our stores: growth potential R1 billion – R2 billion*
  • Expand our reach by growing our Makro footprint by ~25%: growth potential R5 billion – R7 billion*
  • Empower the informal and B2B market by driving penetration through Wholesale integration and an engaged customer relationship (Makro Card and customer analytics): growth potential ~R5 billion

*Over five years