Game plans to revamp its homeware business

Sasfin’s Alec Abraham says while this is a move in the right direction, consumers’ focus may shift more to food and essentials.
Image: Moneyweb

Massmart-owned retailer Game is out to revamp its furniture business as part of its turnaround strategy – and has relaunched its homeware range that it says will offer customers a new and modern look.

The retailer notes that its ‘Retail Reimagined’ programme aims to level up its homeware category and gain Game market share as a general merchandise retailer. The range will feature relevant and contemporary pieces that will also be budget-friendly, with 75% of the products on offer updated across categories including furniture, décor, flooring, and lighting.

“Retail Reimagined is all about transforming and improving the customer experience – not only through an updated look and feel in our stores, but also through the product lines we are offering,” said Andrew Stein, vice president at Game.

“Consumers [are] no longer looking to purchase homeware products in isolation but rather are seeking a complete solution that will assist them in updating and finishing their homes. Many of our consumers are renting or staying in small spaces – meaning they are often looking for modern [and] quality pieces to refresh spaces as opposed to making structural changes.”

Game’s strategy to improve sales follows its poor performance in the 52 weeks ended December 26, 2021, as revealed in its recent sales update. Total sales were down 8.1% to R15.3 billion. Of Massmart’s three subsidiaries – including Builders Warehouse, Makro and Game – the latter performed the worst.

The parent group attributed this to disruptions in the supply chain, low consumer traffic in malls, rising spending pressure on its customer base as well as the July unrest. Ten Game stores that suffered damaged during the unrest have remained closed. Moreover, Massmart also announced in late December that 15 of its Game stores were not profitable and were up for possible sale. This move would reduce the footprint from 114 to 99 stores.

Sasfin senior equity analyst Alec Abraham says he has been questioning Game’s relevance in the South African market given shifting consumer behaviour patterns since the onset of the pandemic.

“[Game] seemed to be stuck in this place where it was [a] food and general merchandise and it was targeted towards the low end,” he told Moneyweb, adding that he struggled to see the relevance and growth opportunity of the business, as it was not delivering to an online market.

“The benefit of moving towards a general merchandise retailer is that it’s higher margin than its food [business]. Certainly, it will help with the profitability model of Game [because] it’s about tweaking what they sell, and I think they certainly are stepping towards the right direction.”

Abraham also commends Massmart’s move of shedding some Game stores given their profitability prospects, especially in an environment plagued by increasing consumer pressure.

“The outlook for consumer wealth in South Africa, particularly in the lower income groups is shockingly poor in the medium-term, and what we have seen is a shift more and more away from discretionary spending like general merchandise and clothing, and certainly towards food and more basics. The fact that they are reducing their stores is a good thing because it really is becoming difficult in the market to achieve real volume growth,” he noted.

Abraham adds that though restructuring its homeware business will benefit the retailer, it might not reap the rewards for too long as consumers’ focus is mostly on food and essentials.

“We certainly have seen a bit of pandemic uptick as people invested in their homes, but I really think discretionary spending like household equipment, furniture and general merchandise will take a slump back as we go into 2022/23. Primarily, however, it’s good that they are refocusing on what they should be selling.”

Despite past and anticipated challenges, the retailer is determined to attract customers and increase traffic in malls by showcasing new stands and display units that will give consumers a better view of the full range on offer, while also providing an idea of how the items could be styled in their homes.

According to the store, the new displays are currently set up in Fourways Mall and Mall of Africa in Gauteng.

Palesa Mofokeng is a Moneyweb intern.


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