Massmart to Trial Smaller Stores Across sub-Saharan Africa

Massmart to Trial Smaller Stores Across sub-Saharan Africa

Wal-Mart, which owns a 51 percent shareholding stake in Johannesburg’s Massmart is planning to help the retailer expand across the African continent — but on a smaller scale, according to a Wall Street Journal report.

Because of accessibility issues with larger areas of land, Massmart Holdings will shift to promoting smaller retail spaces. Adding to almost 400 stores throughout 12 African countries, 89 of the more moderately sized stores will be opened over the next three years.

Grant Pattison, Massmart chief executive told the Wall Street Journal that it’s very likely the expansion will be successful as a pilot store — which was tested in Nigeria — received positive responses. Ten Nigeria micro retailers will open in total. A large outlet store will also open in the same country next year.

“The first pilot has confirmed it’s going to work…now the focus is on logistics,” Pattison said in the report.

Part of the transition includes lowering the price of food and retail goods to satisfy customers. All around, price points have come with at a widespread cost.

Last week Bloomberg reported that Massmart missed profit targets due to unsold goods in Game stores.

“Game sells durables to middle-income consumers and that’s a pretty tough environment. In South Africa, retailers are discounting to get volumes, so that results in margin pressure,” Guy Hayward, Massmart COO, told Bloomberg.

Though rural area stores are a challenge, in 2014 Massmart will expand total floor space by roughly 6.2 percent.