Byron's Massmart site visit

Yesterday I went to Massmart's annual store visit which I must say was very interesting. They took us on four store visits as well as a look at their central distribution centre for Gauteng and the rest of Africa. We started off at the Makro in Woodmead which is their second biggest revenue spinner. The store has revenues of over R1,1bn a year and the second biggest butchery in the country. It's all about size and scale and allows the customer to get almost anything he/she needs or wants within one shop. The liquor store is also massive.

The next store we visited was the Dion Wired in Boksburg. This is one of my favourite shops and one that falls well within that aspirational consumerism theme we like so much. From iPads to affordable flat screen TV's to Nespresso machines. They have it all and although the electronics industry is highly competitive I am confident these stores will do well considering our economy.

Then we went to one of their Cambridge stores in Vosloorus, a township in the South East of Johannesburg. I was very impressed with the size and scale of this grocery super market offering very cheap goods to low end consumers. It has the feel of a massive African styled kiosk with everything from fresh meats to an array of African healing muti selections. Although it was still early, the queues were growing by the minute. There is competition for this market but I believe there is still such a high demand for such stores which is still a fairly new concept in this country.

After that, we went to their distribution centre which was back in Boksburg, nice and close to the N3 highway coming in from Durban. The warehouse was massive as we sat with an aerial view from the meeting room. As the operations manger explained how the systems worked you realised how well organised the warehousing process was. It has to be. Everything is processed electronically with a maximum of 48hrs in the warehouse before being trucked off to the relevant Game and Dion Wired stores.

South African retailers are not reinventing the wheel here, it's all been done before and on an even larger scale. That is why it is so important to have Wal-Mart guiding these guys in the right direction and avoiding mistakes they have already made and learnt from whilst building the biggest retail system the world has ever seen. Seeing the warehouse made me really appreciate the behind the scenes hard work it takes to get quality products to consumers at good prices.

Our last visit was to the Game and Foodco at Greenstone mall. Everyone knows about Game but Foodco is a fairly new concept. Basically they have taken 20% of the Game store and turned it into a grocery section. It has a very similar feel to a really nice Pick n Pay targeting the upper middleclass consumer. I was impressed and think that a lot of Game customers will be pleasantly surprised. I do feel however that they need to roll out a big marketing campaign to get the brand out there. The sector is very competitive.

All in all it was an interesting visit and I remain happy to have this company as our favoured retailer. The fact that Wal-Mart is guiding an already very highly regarded management team through the challenges of being a mass retailer in an undersupplied economy makes me believe that even though it looks expensive, as a long term hold, shareholders will be handsomely rewarded.