Low growth, high unemployment and a rising cost of living hurt South Africans’ spending power, resulting in its first half-year trading loss in two decades last August.
It comes as no surprise that the South African unit of Walmart, Massmart, is in talks with unions to shut down its DionWired and Masscash stores.
Its Massdiscounters division, the largest within the group with more than 160 stores, was the most affected. The giant retailer’s misfortunes extended to its Masscash division, with the latter recording a trading loss of R190.4 million across its African retail stores, from a loss of R4.1 million in 2018.The retailer is now expected to cut up to 1 440 jobs. According to its website, it currently employs more than 48 500 permanent and flexitime staff across the group.
“You only need to drive around South Africa and you can notice that in the past five years, there are independent wholesalers in areas that are not supported by formal retailers,” Walker adds. Gilmour says he had expected the Jumbo, Rhino and Cambridge Foods chains to do well, as they target the lower end of the market.Alec Abraham, senior equity analyst at Sasfin Wealth, shares the same sentiments expressed by Walker and Gilmour, adding that South Africa’s low GDP has also been a major factor.
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