JSE-listed retail and wholesale group Massmart is making a flurry of announcements ahead of the release of its full-year results on Friday – the latest being that it is in negotiations to acquire a controlling stake in grocery delivery service OneCart Pty (Ltd).
Massmart which owns Makro, Builders Warehouse and the struggling Game retail chain said on Wednesday that the planned acquisition is in line with its “intent to accelerate e-commerce growth”.
“Negotiations are at an advanced stage and the group hopes to conclude discussions in the coming weeks,” it added.
“The proposed acquisition is consistent with Massmart’s strategy to invest in and accelerate e-commerce growth, particularly in the fast growing on-demand delivery segment,” said Massmart group CEO Mitch Slape.
“A key objective going forward would be to invest in aggressively growing and fully supporting OneCart’s existing independent retailer marketplace model that enables consumers to order from multiple retailers via a single platform,” he added.
The latest announcement follows Massmart confirming in a Sens statement on Friday that it has signed a deal to sell its Cambridge Food and Rhino Cash & Carry chains, together with parts of the Masscash business and Fruitspot, to JSE-listed Shoprite Group for around R1.36 billion.
The sale of loss-making Cambridge Food has been on the cards for a while. It is part of the group’s much-vaunted turnaround strategy under new CEO Slape, who was parachuted into the position about two years ago by Massmart’s majority owner, US-based retail giant Walmart.
Massmart’s turnaround strategy includes a much more concerted drive into e-commerce, to compete with the likes of Shoprite’s highly successful Checkers Sixty60 on-demand delivery service and Pick n Pay’s Bottles service, now dubbed Pick n Pay ASAP!
All major retailers, including in the food, clothing and general merchandise retail space, have reported major spikes in online sales, which has been boosted by the Covid-19 pandemic. The pandemic has seen more people stay home or work from home since the outbreak at the beginning of last year.
According to Massmart, online sales across the group in 2020 increased by 58.6%, while the number of unique e-commerce customers grew by 73% and click-and-collect orders increased by 69.5%.
Its e-commerce unit contributed 1.8% of total sales, representing a significant increase over the prior year.
Meanwhile, OneCart has achieved year-on-year growth of 400% since inception.
In March this year Massmart outlined the group’s immediate e-commerce priorities including to:
- Establish a unified group-wide e-commerce capability under the leadership of Sylvester John who has been seconded by Walmart to fulfil the role of Massmart group e-commerce vice president;
- Revamp the makro.co.za, game.co.za and builders.co.za online user interfaces, including key functionalities like search, to provide a more seamless and intuitive customer experience;
- Develop new transactional and value-adding mobile first digital solutions that cater to different customer occasions, journeys and segments, including participation as anchor retail tenant on the Vodapay Super App; and,
- Strengthen and expand order fulfilment capabilities such as on-demand and same-day order fulfillment, ‘ship to home’ capability from distribution centres to supplement store fulfilment capacity and improving the click-and-collect customer experience in stores.
Commenting on Massmart’s e-commerce ambitions John said: “It’s clear that we have the brand recognition, geographical presence, merchandise assortment, procurement scale and primary logistics capability to be an even more successful e-commerce player.
In addition to better leveraging these assets, our immediate opportunity is to improve and expand our digital sales platforms and last-mile delivery capability. The successful acquisition of OneCart will go a long way toward achieving this.”
Slape added: “Successful closure of the proposed OneCart transaction will contribute immeasurably to our centralised e-commerce capability that has specifically been established to concentrate scarce expertise, including Walmart experience, in a way that will accelerate adoption of e-commerce best practice at Massmart.”