Dion, the discount store in the Massmart stable, has closed its Johannesburg
head office. The head office is being integrated into the Game headquarters
based in Durban, in a newly formed mass discounters division.
Dan Barrett, the chief operating officer for Massmart, said in the past
three to four months key Dion staff had been relocated to Durban.
In addition, a strategy for optimum growth of the two retail brands has been
implemented. This has seen a modification of the Dion merchandise mix with
the addition of departments typical of Game stores such as health and beauty
and sweets in an attempt to boost trading density.
The composition of stores has been changed with the opening of a further
seven Game outlets and the closure of and conversion of non-performing
stores to yield 38 Game stores and 23 Dion stores from 32 and 26 stores
respectively.
The store development programme increased space by 57 450m2 and annualised
sales by R1 billion.
The changes also mean that the Dion store chain will only be represented in
Gauteng and the Western Cape. The store that was to open in the La Lucia
Mall in Durban north has been replaced with a Game store, signalling the
likelihood that Dion will not be represented in KwaZulu Natal
Game has outlets in all nine provinces as well as Namibia, Botswana and
Zambia.
The buyout of Game from McCarthy Retail by Massmart last year was the best
move for both stores, said Barrett.
Under different shareholders the two retail outlets were on course for a
head-on collision in their expansion plans which would have led to a no-win
situation all round.
Massmart, the retail conglomerate, which has Makro, Shield, Game, Dion and
Cash and Carry Wholesalers brands in its stable, turned in record 1999
results despite extremely tough trading conditions.
For the year to June 30, Massmart`s bottom-line earnings were R181 million,
up 243 percent on the previous year.
Game and Dion contributed R78,2 million of the profits before interest and
tax. Barrett is confident that in combination the two chains will earn a lot
more profit for the company.
With exceptional returns (up 234 percent) under tough trading conditions the
mass discount chains are expecting a substantial increase in turnover as the
economy starts to turn.
"We have really got our act together and we should see a spike in sales,"
said Barrett, who is confident Christmas is going to be a good one for
retailers this year.
Already the stores have started to see the benefits of additional spending
come through from the Old Mutual demutualisation. This was not the case when
Sanlam listed because of the high interest rates that prevailed at the
time. - Durban