Massmart, a Walmart-owned South African discounter is launching mini Makro stores within existing sites of its Game supermarket stores. The mini Makro stores will be trialled within four Game sites. This strategic shift comes in response to evolving consumer preferences and market dynamics, aiming to enhance accessibility and convenience for shoppers while optimizing operational efficiency.
The decision to venture into small-format stores reflects Makro’s commitment to staying agile and responsive in an ever-changing retail landscape. With the rise of urbanization and the growing demand for convenience, the company is strategically positioning itself to cater to the needs of urban consumers who seek hassle-free shopping experiences closer to home.
Enhancing Accessibility and Convenience
Group corporate affairs head Brian Leroni said the objective is to make Makro stores more accessible to a wider market. It is also an important part of Makro’s omnichannel strategy.
“We have been delighted by strong expressions of support from landlords, suppliers, consumers, and our own staff”. He added that the concept’s development was at an advanced stage and has been tested with focus groups.
According to Evan Walker, portfolio manager at 36ONE Asset Management, the mini Makro plan holds promise, provided that pricing remains competitive and aligns with consumer expectations. Affordability and value proposition will be key drivers of success for these compact stores.
Evan said they supported the strategy of converting Game stores into small-former Makro stores ten years ago, and it still makes sense.
“The combined Makro and Game store turnover have a lot more critical mass from a marketing and pricing perspective. The only way they will be competitive is through price, especially against eCommerce players like Takealot, Amazon, Temu, and Shein.”
Understanding Customer Response
Makro’s foray into small-format stores is not a shot in the dark but a calculated move backed by thorough market research and analysis. By testing the waters with mini outlets in malls, the company aims to gauge consumer response and fine-tune its approach accordingly. This strategic experimentation highlights Makro’s commitment to innovation and adaptability in an increasingly dynamic retail landscape.
The decision to replace four Game stores with mini Makro outlets signals a strategic consolidation of resources and focus on core offerings. With consumer preferences shifting towards one-stop shopping destinations, Makro is capitalizing on its strengths in categories such as electronics, homeware, and groceries to create a compelling value proposition for shoppers.
By diversifying its store formats, the company not only expands its reach but also mitigates risks associated with changing consumer preferences and economic fluctuations. As noted by Evans, “Makro’s small-format stores represent a smart move to adapt to evolving consumer behaviours and enhance shareholder value”.
