Secret plan to replace Game stores with small-format Makro outlets

Massmart is set to replace Game stores in popular shopping malls with small-format Makro stores, but it would not provide details about the progress.

In April 2024, Massmart announced that it plans to trial a new concept of small-format Makro stores by replacing existing Game stores.

Massmart’s Senior Vice President of Group Corporate Affairs, Brian Leroni, explained why they used Game stores for this trial.

“The challenge in developing a new concept store is finding suitable retail space in popular shopping malls,” he said.

“To overcome this, we have decided to test the concept in existing Game store sites located in popular shopping malls.”

This sparked speculation that the small-format Makro store trial was to assess whether it was viable to convert all Game stores to Makro outlets.

Game has underperformed for years and has been a thorn in the flesh for Massmart, owned by the global retail giant Walmart.

Massmart owns numerous well-known retail brands, including Game, Makro, Builders Warehouse, Jumbo, and Shield.

Makro and Builders Warehouse have performed well in recent years. However, Game has dragged the company down.

Massmart’s results before it was delisted from the JSE in 2022 revealed that Game experienced a huge sales decline.

Therefore, it made sense for Massmart to look at replacing Game stores with the popular and successful Makro retail brand.

Evan Walker, portfolio manager at 36ONE Asset Management, highlighted that this plan has been on the card for a decade.

However, the plan did not materialise because the previous Massmart management saw value in the Game brand.

Walker supports the initiative, saying Makro is a very good business with a strong brand across the country.

He said they supported the strategy of converting Game stores into small-former Makro stores ten years ago, and it still makes sense.

He added that converting Game stores into small-format Makro stores will increase Makro’s walk-in customers and expand its distribution network.

Makro has a strong eCommerce focus, and having more stores to serve as distribution centres will strengthen its online shopping capabilities.

Massmart denies plans to replace Game with Makro

Massmart’s Leroni denied that the trial aimed to assess the viability of replacing Game stores with small-format Makro stores across South Africa.

“We realise that this announcement about small-format Makro stores can result in speculation about the future of Game,” he said.

“We would like to emphasise that our objective is to make Makro stores more accessible to a wider market through a small, mall-based Makro store concept.”

He added that the objective is not to convert Game stores into Makro stores and that there will be no job losses.

However, he admitted that there was strong demand for small-format Makro stores in Game locations.

“Our recent research has shown that there is significantly more customer demand for the idea than was previously the case,” he said.

He explained that the project’s objective was to test the small format’s executability and consumer response to convenient access to Makro rather than to close Game stores.

“If the concept is successful, then we will follow our normal real estate procurement processes to secure the sites most suited to the format,” he said.

However, this sounds like corporate speak, trying to hedge its bets should the trial to replace Game stores with small-format Makro stores fail.

Daily Investor asked Massmart for an update on the project, but the company preferred not to comment.