Kampala, Uganda | URN | Massmart Holdings, the owner of Game Store in Uganda has announced an outright exit from Ugandan market, having failed to get a local partner or buyer.
In March 2021, Massmart announced that after a review of its operation in East Africa, it was exploring the possibility of better business if a local partner was contracted to manage the outlets in Uganda.
This would require getting investors and entrepreneurs “with a better understanding of local market conditions,” according to the company statement.
Massmart, together with the Game Store management, then initiated a process over a 12-month period to find how possible it was to get investors in Uganda who would buy the store, but this seems to have failed, prompting the company to think of total closure.
“One possible way forward is now to consider closing our Game Store in Uganda and we have therefore initiated potential store closure consultations with our staff members in the potentially affected stores,” says Neville Hatfield, Vice President of Merchandise.
One of the main issues outstanding will be the employees at the store, said to be about 300, whose fate is currently uncertain. For one year, they have been aware that the company would leave the country but were comforted by the idea that the business would just change hands and give them hope of retaining their jobs.
Speaking on condition of anonymity, some attendants at the Lugogo Mall outlet said they prefer discussing their fate with their current bosses as a group, as opposed to individually contacting Hatfield.
“From the very beginning of the process to explore alternative options for our store in Uganda, we have been firmly committed, regardless of the decision taken, to honour our obligations to our staff members, customers and business partners, and we would like to assure you that this remains the case,” their boss said. He said there will be a transparent consultation process with the staff members and their representatives, to agree on the next steps.
“It is difficult to anticipate the timing of the consultation process, but please be assured that we will revert to you as soon as we have collective clarity on the way forward,” Neville added.
Game store in Kampala was opened in 2004, after a total investment of 11 million US Dollars (41 billion Shillings) or 20 billion Shillings at the time, and then Minister for Trade and Industry, Edward Rugumayo hailed it as proof of confidence in the economy.
“The investment says a lot about how this company perceives the stability and potential growth of the consumer market in Uganda, but also the user-friendly environment our country provides for foreign investment,” Rugumayo said.
Speaking to the media in South Africa, Mitchell Slape, Massmart Chief Executive said the difficult business environment had made it hard for the businesses to survive and necessitated them to dispose of its 14 underperforming stores outside South Africa. Other subsidiaries affected include Botswana, Ghana, Kenya, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Tanzania and Zambia on which discussions are still ongoing.
“The performance and the complexity in running those businesses is something that frankly we needed to address. We’ve commenced a formal sales process, we’re currently in discussions with potential purchasers to take on those stores,” Slape said.
When deciding to quit in 2021, Game/Massmart was aware of the challenges of operating in a country where local entrepreneurs were taking more interest in the supermarket business. The locally-owned ones that have so far survived and grown include Capital Shoppers, Standard Supermarkets, Quality Shoppers, Checkers Supermarkets, and Kenjoy Supermarkets.
That is why selling to a local entrepreneur was the first option for Massmart, which hoped their newly-found partner would stay and compete with existing local ones, but this was not to be. Another chain which went the same way as Game was Shoprite, also from South Africa.
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The rapidly expanding Carrefour recently completed the takeover of Shoprite’s six outlets in Uganda, with the management saying they have studied the supply chain and consumption or shopping behaviour of Ugandans.
One of these is the stocking of locally produced products, as well as the ‘Duuka’ type of display which included weighing and parking of products like beans in the presence of the customer. Experts also say that only shopping is also affecting the supermarkets and successful ones have to integrate the trends.
Apart from Shoprite, Game follows a number of Kenyan-owned stores that include Tuskys, Nakumatt and Uchumi which closed businesses between 2017 and 2019.