JSE-listed retail and wholesale group Massmart is making a series of announcements ahead of the release of its annual results on Friday; the latest is that it is in negotiations to acquire a majority stake in grocery delivery service OneCart Pty (Ltd).
Massmart, which owns Makro, Builders Warehouse and struggling retail chain Game, said Wednesday that the planned acquisition is in line with its “intention to accelerate e-commerce growth.”
“The negotiations are in an advanced stage and the group hopes to conclude the discussions in the next few weeks,” he added.
“The proposed acquisition is consistent with Massmart’s strategy to invest in and accelerate the growth of e-commerce, particularly in the fast-growing on-demand delivery segment,” said Massmart Group CEO Mitch Slape.
“A key goal going forward would be to invest in aggressive growth and fully support OneCart’s existing independent retail market model that enables consumers to order from multiple retailers through a single platform,” he added.
The latest announcement follows Massmart confirming in a Sens statement on Friday that it has signed an agreement to sell its Cambridge Food and Rhino Cash & Carry chains, along with parts of the Masscash and Fruitspot business, to the JSE-listed Shoprite Group for around R1.36. billion.
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The loss-making sale of Cambridge Food has been in play for a while. It’s part of the group’s much-vaunted turnaround strategy under new CEO Slape, who was parachuted into the job about two years ago by the majority owner of Massmart, the US-based retail giant Walmart.
Massmart’s turnaround strategy includes a much more concerted push toward e-commerce, to compete with companies like Shoprite’s successful Checkers Sixty60 on-demand delivery service and Pick n Pay’s Bottles service, now called 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 have been fueled by the Covid-19 pandemic. The pandemic has caused more people to stay home or work from home since the outbreak early last year.
According to Massmart, online sales across the group in 2020 increased by 58.6%, while the number of unique ecommerce customers grew by 73% and click-and-pick orders increased by 69.5 %.
Its e-commerce unit contributed 1.8% of total sales, a significant increase from the previous year.
Meanwhile, OneCart has achieved 400% YoY growth since its inception.
In March of this year, Massmart outlined the group’s immediate e-commerce priorities, including:
- Establish a unified e-commerce capability for the entire group under the leadership of Sylvester John, who has been seconded by Walmart to serve as the vice president of e-commerce for the Massmart group;
- Refresh the online user interfaces for makro.co.za, game.co.za and builders.co.za, including key functionalities such as search, to provide a smoother and more intuitive customer experience;
- Develop new transactional and value-added mobile digital solutions that adapt to different occasions, trips and customer segments, including participation as a retail anchor tenant in the Vodapay Super App; and,
- Strengthen and extend order fulfillment capabilities, such as same-day and on-demand order fulfillment, ‘ship-home’ capability from distribution centers to complement store fulfillment capabilities and enhance customer experience click and collect in stores.
Commenting on Massmart’s e-commerce ambitions, John said: “It is clear that we have the brand recognition, the geographic presence, the merchandise assortment, the scale of acquisitions and the primary logistics capacity to be an e-commerce player yet. most successful.
In addition to making better use of these assets, our immediate opportunity is to improve and expand our digital sales platforms and last-mile delivery capabilities. The successful acquisition of OneCart will go a long way toward achieving this. ”
Slape added: “The successful closing of the proposed OneCart transaction will greatly contribute to our centralized eCommerce capability that has been specifically established to focus lean experience, including Walmart expertise, in a way that will accelerate the adoption of best practices. e-commerce at Massmart “.