Massmart fails to sell its Game store in Uganda, considers closure
Game Stores in Kampala. PHOTO | FILE
What you need to know:
- In March last year, Massmart had indicated it would review the operations of its Game Stores in East and West Africa, noting that during the review, it would explore the option of engaging potential buyers to improve the performance of some of its stores under the management of investors and entrepreneurs with a better understanding of local market conditions.
Massmart, the operators of Game Store in Kampala have opted to close their only outlet in Lugogo after failing to find a buyer.
In March last year, Massmart had indicated it would review the operations of its Game Stores in East and West Africa, noting that during the review, it would explore the option of engaging potential buyers to improve the performance of some of its stores under the management of investors and entrepreneurs with a better understanding of local market conditions.
The process, in a statement released last night, had been ongoing over the last 12 months before a decision to close had been reached.
Mr Neville Hatfield, the Game vice president of merchandise, noted in the statement that the review had sought to investigate, as a preferred option, “the opportunity to sell our store in Uganda to local investors”, but the initiative had “unfortunately … not yielded meaningful results”.
Therefore, he noted, the only possible way forward was to consider closing the Game store in Uganda.
“We have, therefore, initiated potential store closure consultations with our staff members in the potentially affected stores,” Mr Hatfield said, noting that from the very beginning of the process to explore alternative options for their store in Uganda, they were committed, regardless of the decision taken, “to honour our obligations to our staff members, customers and business partners”.
Mr Hatfield also noted that their present focus will be to ensure a transparent consultation process, after which they will update all stakeholders on the agreed next steps to take.
“It is difficult to anticipate timing of the consultation process, but please be assured that we will revert to you as soon as we have a collective clarity on the way forward.”
In East Africa, Massmart operates one store in Uganda, three in Kenya and one in Tanzania.
Game Stores has been operating in Uganda for close to 20 years, employing more than 300 Ugandans.
Massmart is Africa’s third-largest distributor of consumer goods and one of the biggest retailers of general merchandise, liquor, home improvement equipment and supplies and wholesaler of basic foods.
During the half year ended June, Massmart returned a total of R41.3b (about $2.34b) worth of group sales, generated from 403 retail and wholesale stores in 13 sub-Saharan countries.
The retail business has been undergoing a number of challenges in the last two years, worsened by Covid-19 related lockdowns, dampened consumer spending resulting from subdued earnings, runaway inflation and an increase in the cost of business.
A number of large retail stores have in the process been starved of traffic, which is a key aspect in the supermarket space.
Last year, Shoprite, which had operated in Uganda for more than 20 years announced it would exit the market, citing a reduction in sales and an increase in the cost of business, which had eaten into its bottom lines.
Shoprite stores were taken up by Carrefour at an undisclosed cost.
Before Shoprite, large retail stores such as Uchumi, Nakumatt and Tuskys all from Kenya had opted to close before struggling to shake off sustained financial bleeding.
However, the retail business is currently leveraging on the growing digital experience to invest in online trading and building partnerships with the likes of Jumia.
