Massmart – amid the buyout offer made by Walmart in August – has begun closing down unprofitable Game stores across South Africa.
In December 2021, the retailer announced that it had identified 15 stores that would be subject to a possible sale, following the re-lay of 114 Game stores in South Africa, allowing Massmart to compare sales trends and potential.
Eight of the 15 stores identified have now started closing. These stores are:
- Game CBD Cape Town
- Game Westwood Mall
- Game Bel-Air Shopping Centre
- Game Greenstone Shopping Centre
- Game Mall of the South
- Game Gilwell Mall
- Game Ulundi – King Senzangakhona Shopping Centre
- Game Hazyview
“As part of the closure process, we are liquidating stock, and so you will notice that we have clearance sales in these selected stores,” Game vice-president Andrew Stein said.
Clothing, camping equipment, laptops/computers, furniture and toys are all marked down by 20%, hand tools, hardware, air conditioning and fans by 25%, while heaters, electric blankets and stationery are less 40%.
“This decision [to close the stores] represents an intensification of our initiative to optimise the Game store portfolio as we move beyond our turnaround imperative, to prioritise investment in core and high returning trading assets,” Massmart said.
These closures include the divestiture of its 14-store Game portfolio in East and West Africa due to currency volatility and constrained consumer demand, making it difficult to operate profitably.
Massmart’s footprint outside of South Africa is now limited to its operations in SADC countries (Botswana, Lesotho, Malawi, Mozambique, Namibia, Tanzania and Zambia).
Section 189 consultations
Massmart noted that it is currently following Section 189 of the South African Labour Relations Act 66 of 1995.
This consultation process started six weeks ago and aimed to redeploy the staff members affected by the eight closures.
“Game is working with affected staff to help them find positions elsewhere within the Massmart group. This has been and remains a priority for us,” Stein said.
Massmart’s efforts to turn around Game seem to be yielding results
According to Massmart’s 2022 interim results – released on 29 August – the retailer’s core business has been “significantly outperforming” its non-core portfolio.
Compared with its 2021 results, while Game’s core store sales remained the same at R6.4 billion, its comparable store sales increased by 2.1%.
Its gross margin increased by 74bps to 27.9%, and trading loss improved by 30.1% to R231 million.
In South Africa, Massmart added that, while Game has a “positive performance trajectory”, there is still much work to be done.
The South African core business saw a 2.5% increase in comparable sales, with positive comparable sales growth in five of the year’s first six months.
Its trading losses have improved by over 50%, and its seen a 140% growth in online transactions since the relaunch of the Game website in April 2022.