MAKRO: Wholesale Giant Transforms to E-Commerce Expert

For more than half a century, Makro has been bringing convenience and affordability to local households and businesses, growing in these 50 years to one of South Africa’s most important wholesale retail outlets and adding a further 21 stores to its original site in Germiston. “Opening our first store was a milestone for South Africa,” Makro explains. “It became the first cash-and-carry store in the country making use of top-end technology for stock and sales tracking.”

Makro’s bold, quad-colour slash frontage alone has not made its stores an unmistakeable and unmissable emblem of the South African wholesale scene; their sheer size also makes them – quite literally – stand out from the crowd. Five new locations had been added to the Makro South African stable by 1989, and in 1993 it built what came to be known as its flagship site, Woodmead, going on to become one of the most popular retail outlets in the northern suburbs of Johannesburg. A massive Riversands store measuring 23,263 m² in 2017 again revolutionised the concept, modelled more on a department store instead of the more typical Makro warehouse and with a sharp focus on minimising its carbon footprint.

On top of more everyday comestible and luxury staples, and a dedicated store housing imported and local liquor including champagne, beer, liqueurs and spirits, Makro also provides access to over 65,000 general merchandise products: computers and communication, office furniture, stationery, power tools, lighting, televisions and so much more form part of a vast collection.

In 1990 then-MD, Mark Lamberti, founded Massmart, a multi-format major wholesale and retail group of which Makro is the cornerstone, whose merger in 2011 with US-based retail giant Walmart afforded an even further expanded offering to shoppers, allowing yet broader variety and brands at even more competitive prices.

TAKING ON TAKEALOT

All stores are located in major metropolitan areas and share the exact same ethos of operating under a low cost/low margin trading philosophy, enabling high volume distribution of merchandise at vastly reduced or even wholesale prices. “Our single most powerful differentiating feature,” Makro elaborates, meanwhile, “is true one-stop shopping with everything available under one roof.”

A key part of its overall evolution has been Makro’s early and acute deployment of the power of the e-commerce aspect of what it sets out to offer. “Makro has evolved in the retail space from a stalwart warehouse chain to now being able to offer customers a convenient online shopping hub,” it expands. “2014 saw the release of our e-commerce platform. This was the next step in our digital evolution and the perfect opportunity for us to ensure that we continue to provide the best shopping experience on every level. Our extensive online shopping range includes the majority of items you would expect to find in any Makro store.”

Competition is rife, and stiff, in online retail in South Africa, and dominance in physical stores does not automatically translate to e-superiority. 2020 brought a 40% increase for Makro in its online sales, however, a huge step towards becoming an established online shopping presence and eclipsing the likes of Takealot.

Responding to what it has observed regarding shifting consumer patterns, in particular an increase in retail customers and drop in wholesale and commercial customers, Makro’s bid to become the runaway online leader in South Africa coincides with the appointment by Massmart in October 2020 of executive Sylvester John to lead its e-commerce team.

John played a key role in driving the establishment of the company’s last-mile delivery organisation, which now delivers from over 3,000 stores to more than 500 US domestic markets and covers 65% of the country’s population. Makro has a significant edge from a logistics perspective, using its 23 physical stores as its online distribution centres. Given their warehouse style, size and geographic locations, these are ideally placed to rapidly and conveniently respond to customer needs and help Massmart establish market-leading e-commerce and omni-channel capability, while leveraging John’s own deep experience.

“It’s notable that our sophisticated national distribution centre network and warehouse store base offer fantastic geographic coverage for rapid online order fulfilment,” he told MyBroadband. “It’s clear that we have the brand portfolio, geographical presence, merchandise assortment, procurement scale and primary logistics capability to be a successful e-commerce player.

“Our immediate opportunity now is to even better leverage these assets by further improving our digital sales platforms and last-mile delivery capability.”

RECOVERY AND REVIVAL

Sylvester John was also at pains to mention a new series of mini-apps, for Makro and Builders, available on the VodaPay super app to enable users to shop online from the two stores’ catalogues using their mobile devices. This marks the first time that Massmart has made it possible to buy from its stores using a mobile app, perfectly in line with its announcement regarding e-commerce as a Business-to-Business (B2B) and Business-to-Consumer (B2C) strategic growth vector.

“This is an important step in our e-commerce strategy,” John said, “which is underpinned by a mobile-first approach which in this case will provide access to 43 million customers, 21 million mobile devices and 12.9 million 4G devices, with the additional benefit of data free access for all Vodacom users.”

Its bricks and mortar proposition remains as crucial as ever, alongside Makro’s mobile-first e-commerce drive, with both reopening and even brand-new sites spelling real hope as recovery continues in the retail space. Following the spate of looting in Gauteng and KwaZulu-Natal, Makro committed in July to rebuilding its stores, and in mid-December finally welcomed back its Springfield location.

“The reopening of this store is as important to us as it is to our customers,” said Massmart CEO Mitch Slape. “It symbolises rebirth and renewal. It tells of our resolve and says that as a company, and as a people, we will always come back stronger than before.” Not limited to improving the existing, Makro also heralded a brand-new facility in May, with a state-of-the-art Gqeberha store exhibiting the very latest in building design to attain the height of energy efficiency and sustainability.

As Makro firmly re-establishes itself on steady footing, Massmart was able to report sales from South African stores amounting to R27.9 billion for the 19-week period ended 9 May 2021, increasing by 10.1% on the prior year. Makro itself led the way with a sales bump of 16.6% over the previous year, contributing to a much-improved trading profit performance and allowing it to pursue its clear path for future growth.

“The period has been characterised by continued group-wide expense control and margin growth,” summed up Mitch Slape, “positioning the group to allocate capital resources, leverage group-wide infrastructure and focus management time more efficiently to in turn allow us to take full advantage of new market opportunities.”