Makro goes micro as it replaces 4 Game stores with mini-Makro outlets

Massmart, owned by Wallmart, is trying out a new strategy with its Makro stores in South Africa.

Four existing Game stores located in shopping centres across the country are to be used to test small-format Makro stores.

However, Massmart says this does not mean the end of Game.

While management has not revealed much detail, News24 quotes exec Dries D'Hooghe as saying the new-look stores would be launched early in the second half of the year.

The four outlets will be about a quarter of the normal Makro size at 3 000 square metres.

Bruce Whitfield gets comment from Evan Walker, portfolio manager at 36ONE Asset Management.

Walker sees a two-fold strategy at work here for Makro to get closer to the customer from a distribution perspective, being online.

"It's obviously a strategy from a walk-in customer base, but it's also a distribution strategy - you've seen what Checkers have done with Sixty60 and I think Makro has to match that on the retail component."

Evan Walker, Portfolio Manager - 36ONE Asset Management

At last count, Game still had more than 160 stores across the country.

You'll also find them in peripheral areas where Makro has no presence, Walker notes.

"I think the big essence of this transaction is really the fact that the combined Makro plus turnover of the existing Game stores have a lot more critical mass for a business from an advertising perspective, but more so fundamentally from a pricing perspective going forward."

"The only way they're going to challenge this market is to be very competitive on price against the likes of the Takealots, the Amazons and some of these Chinese competitors coming into the market now as well."

Evan Walker, Portfolio Manager - 36ONE Asset Management