Massmart says it could shut 34 Dion-Wired and Masscash stores

13 January 2020 | Economic factors

One of SA’s biggest retailers, Massmart, has become the second SA company to announce possible store closures in 2020, a move that could affect up to 1 440 employees. This comes just days after SA’s largest clothing retailer, Edcon, announced the closure of its Edgars store in Rosebank Mall, also citing underperformance.

Massmart, which owns Game, Dion-Wired and Makro among other brands, announced on Monday that it was consulting with its employees about the potential closure of the 34 stores. It said it has already begun talks under section 189 of the Labour Relations Act, a process that companies undertake when they intend to retrench staff.

The announcement comes three months after Mitchell Slape took over as Massmart's CEO in September with a brief to turn around the retailer.

“The Massmart Group has recently conducted a store optimisation project that highlighted a number of underperforming stores in its portfolio. Consequent to this project the Massmart Group seeks to advise shareholders that Massmart has commenced, a potential store closure consultation process,” said the group in a statement published on the Stock Exchange News Services.

The retailer, which has 23 Dion-Wired stores in the SA region, already closed two outlets in the first half of 2019. The retailer said at the time that Dion Wired sales had been affected by low consumer confidence, which caused a decline in customer traffic in major shopping malls. Customers also put on hold purchases of high price-ticket electronic items as SA economy stagnated last year. The tech retailer also faced stock supply challenges causing its outlets to underperform.

Masscash, which consists of wholesale and cash & carry outlets like Jumbo and Rhino which target low-income groups, had experienced severe price deflation in staples like maize, oil and sugar in some of its brands. Massmart started converting some of underperforming brands, like Rhino, to Cambridge Food Retail to help lift their profits.

Massmart said on Monday it will advise shareholders about its progress on the store closures at a later stage, once the retrenchment process consultations are complete.