Massmart to change tactics and pursue opportunities in downturn
May 11 2009
Retail Wrap >>

MASS retailer Massmart was continuing with its strategy of investing for the future despite the recession in the retail sector but would change its tactics to take advantage of new opportunities, CEO Grant Pattison said yesterday. He said the company wanted to take advantage of the short-term opportunities that had presented themselves during the economic slowdown. “Change tactics, not your strategy.” 

Some of these opportunities included taking advantage of advertising space that was cheaper, as all sectors were going through a tough time, said Pattison. Other areas where the group could take advantage and benefit from better value were the property market, as it continued to roll out stores, and better service for suppliers. Some suppliers had found themselves burdened with too much stock. Massmart could take it off their hands for a good price, passing on better prices to consumers, which resulted in entrenchment of the company’s brands. He said consumers, always on the hunt for good value, were now more interested in price and would look at trading down.

Massmart has nine wholesale and retail chains such as Game, Dion Wired, Makro and Builders Warehouse. Each is focused on high-volume, low-margin, low-cost distribution of mainly branded consumer goods for cash, in 14 countries in sub-Saharan Africa through four divisions comprising 254 stores.

Pattison said the company was also focused on clearing stock. He said that overstocked items could be put on special, and placed where people could see them, creating a better price perception in consumers’ minds. Too much stock, he said, could either be seen as a problem, or an opportunity.

Although Massmart’s strategy was not changing, the company was focusing on aspects it might have ignored while the good times were rolling. Pattison said this was something every company should be looking at now. Down cycles exposed what companies got wrong in up cycles, aspects of the business that were easy to overlook when companies were doing well, he said. Although cost management should be a permanent aspect of a business, more time would be devoted to it now, Pattison said.

However, the core strategy remained unchanged as the company continued to be looking ahead to the next up cycle. He said during tough times, it was important to continue to protect the company’s brands and to carry on investing in advertisements, training, development and sustainability. However, the company would delay or stop investments that were not crucial, such as store revamping, Pattison said. These items would not affect the medium- to long-term growth of the company.

Adapted from source: www.fastmoving.co.za, 8 May 2009