Massmart has revealed the impact of COVID-19 on its trading performance. The group’s sales saw a 7.7% decrease in the 12 months to the 21st December 2020. Like for sales fell 7.5% over the trading period as lockdown and a ban on the sale of alcohol hit trading.

Massmart has said that COVID-19 has hit foot traffic, which is perhaps unsurprising. It has been particularly affected the retailer’s November Black Friday sales. While sales in Massmart’s South African stores fell by 7.5%, its sales in the rest of Africa also saw declines of 5.4%. There are more challenges to come: On December 28th 2020, the South African government announced a new level 3 lockdown, prohibiting the sale and transportation of alcohol.

It is more bad news for the struggling retailer, which has struggled for some years in the face of aggressive growth and price competition from retailers such as Shoprite and Pick n Pay, while its non-South African expansion plans have at times felt directionless. Massmart has also paid the price in 2020 for being slow to build out its online offer.

In January 2020, Massmart closed 34 underperforming DionWired and Masscash stores as part of an overhaul of the business. In June 2020, Massmart received a R4bn ($230m) loan from its parent company Walmart to help its cash flow during the COVID-19 pandemic. The company estimated it had lost R2.3bn ($132.2m) in alcohol sales alone during just two months, April and May.

Trendtype believes that CEO Mitchell Slape has several opportunities to radically reshape the business. Among them are:

• Integrating DionWired’s electricals and electronics offer within Massmart stores and getting rid of DionWired as a standalone format.
• Reducing Massmart’s exposure outside South Africa, where the company has a large number of markets where it has a handful of stores (which are costly to maintain).
• Reducing the number of banners it trades under and focusing its offer more closely on visible price leadership.
• Improving and widening its home improvement store appeal: The typical positioning for a South African home improvement store, epitomised by Massmart’s Builders stores, is to be largely male oriented, with a strong focus on price.
• Adopting the approach that has worked well for Sainsbury’s/Argos, Waitrose/John Lewis and M&S in the UK of integrating its online offer more closely so that it is not pooling non-food stock in stores and can offer better click and collect options.