1. Strategic Focus Areas Report
Publication date:
November 2018
Next publication:
September 2019
Strategic Focus Areas Report

2. Masscash Wholesale 2018 Strategic Drivers
Key Focus Areas
Strategic Imperatives
Organisational Re-design for Alignment and Efficiency
Optimise the combined leaner management team and associated support structures
Bed down format strategy
Focus on inter-group collaboration including IT infrastructure, procurement and supply chain projects, thereby improving operational efficiencies
Provide a Superior Route-to-Market for Suppliers
Drive an effective configuration of assets and an optimised supply chain
Drive Customer Value Proposition
Improve the Wholesale customer value proposition through continued investment in customer solutions and sales capability
Expand into Africa
Expand the Wholesale store footprint outside of South Africa

3. Organisational Re-design For Alignment And Efficiency
Optimise combined leaner management team and associated support structures
In February 2018 Massmart announced the restructuring of some of the business functions within Masscash, and the relocation of the head office from Durban to Johannesburg. In addition, the Retail and Wholesale executive teams were combined into a single, smaller executive team under the leadership of Kevin Vyvyan-Day. The intention is to achieve a stronger and more balanced combined executive, allowing the respective management skills of the two business teams to complement one another.
These changes were approached as a formal organisational restructure under s189 of the Labour Relations Act
The restructure is expected to produce estimated annualised savings of R22m for the division, which will be felt in the second half of 2018, and will assist Massmart in its objective of driving structurally lower operating costs and enhanced efficiencies
Bed down format strategy
Masscash is focused on designing the optimal store portfolio, incorporating the best on offer from its current range of formats. This includes reviewing the composition of the Group's current store portfolio and considering, inter alia, the conversion of some Rhino stores to Cambridge
Optimised ranging and assortment is a focus
The strategic store rationalisation programme implemented in 2017 within both CBW and Saverite stores, will continue to be rolled out, as and where Masscash believes it optimal for divisional performance

4. Organisational Re-design For Alignment And Efficiency (cont.)
Inter-group collaboration including IT infrastructure and supply chain projects, to improve operational efficiencies  
Collaboration across and within Massmart divisions continues to be a focus for the Group as a whole. Core functional areas for intra-Group collaboration, include supply chain, IT, real estate, merchandise and private label, inter alia.
 Collaboration efforts across the total Massmart business are being overseen by Llewellyn Steeneveldt, Group Commercial Executive, and Richard Inskip, Group Supply Chain & Logistics Executive. Richard Inskip’s focus was extended in late in his additional role as Group Chief Information Officer to include coordination and optimisation across the Group’s IT efforts.
Within Masscash, the drive towards enhanced collaboration applies to a number of functional areas, including:
Buying
The relocation to Johannesburg and the consolidation of the buying function across Masscash Retail and Wholesale is intended to facilitate better coordination of procurement in the division.
It further feeds into the broader Group and divisional objective to achieve enhanced collaboration and is designed to help drive the estimated R22m in cost savings for the division
Masscash will need to align its supplier relationships vis-à-vis this change, in order to maintain positive relations through the value chain
Supply Chain
The strategic intent for 2018/2019 is the implementation of a Group DC service and network function with the aim of reducing the cost-to-serve by at least 1%.
 The intention is for Masscash to utilise Massmart scale across primary (ex-factory gate to DC), secondary (DC to store) and, in time, tertiary (DC/store to customer) distribution channels
The use of Massmart Logistics Services (MLS) assets (i.e. its fleet) for primary distribution purposes was specifically planned for Masscash Wholesale in 2018/2019 and implementation is evident within the division
The Group has made good progress in terms of providing reliable and cost-effective availability of any product in any format or channel, by leveraging Group scale. In addition, the savings achieved from reduced operating costs have resulted in improved margin and working capital
Supplier onboarding through the Massmart distribution network continues to grow
Masscash continues to generate transport efficiencies resulting from better leverage of Group scale through network planning

5. Provide a superior route to market for suppliers
Masscash believes that the sheer scale of its business is a significant differentiating factor and when leveraged against competitors, presents an unmatched route-to-market for its supplier partners, as well a driver of value for its customer base. To effectively leverage that scale, a number of initiatives were introduced in 2017 and will continue to be rolled out in the latter part of 2018 and into 2019.
Route-to-market project
A route-to-market project initiated in 2017 is still underway, designed to streamline the outbound distribution process and render it as efficient and cost effective as possible. The project is intended to:
Build on existing in-store procedures with updated technology
Develop partnerships with technology suppliers that provide expertise to compliment the Masscash business
Utilise the ‘Transport Control Tower’ for tertiary distribution fleet tracking
Geo-map the informal Retail universe
Develop an enhanced Shield sales force which enables Masscash to:
Continue to grow sales to its existing traders
Grow sales with new traders targeted by the Shield sales force
Deliver on its customer promise
Grow market share
Ensure relevance to suppliers
Route-to-market customer fulfilment architecture: The route-to-market project involves several technology elements:
Customer sales enablement: Spring hand-held technology, which assists with stock management and call-cycle management
Order fulfilment and store operations: ARCH Retail and ARCH Enterprise systems, for effective store and regional order management
Transport planning and management:
Online and mobile logistics planning, routing and workflow management system
Fleet management system
Flash mobile money handling and payments solution which assists Jumbo Wholesale customers to digitise cash

6. Provide a superior route to market for suppliers
Configuration of assets  
Masscash continues with its programme to reconfigure assets for enhanced efficiencies at both store and fleet level. The manner in which this has been and continues to be achieved is:
Store
Maintenance of fewer and larger stores, intended to reduce overall costs and drive increased margin
Strategic franchisee rationalisation programme in Saverite, resulting in an optimised store portfolio
Fleet
The use of MLS assets (i.e. its fleet) for primary distribution purposes
Centralisation of the distribution management process at a national operating centre, based in Johannesburg to optimise the tertiary delivery fleet

7. Drive The Customer Value Proposition
Driving the Wholesale customer value proposition through continued investment in customer solutions and sales capability, has the objective of servicing the Masscash Wholesale customer base in the most efficient and cost-effective manner possible. During 2017 Masscash introduced several initiatives to affect this objective:
Investment in sales capability
Implementation of a 300-strong sales force as an extension of the Shield call centre and existing sales force
Leveraging Shield call centre capabilities for the balance of the Masscash business, including CBW and franchise operations
Investment in hand-held sales and stock management technology
Roll-out of the ARCH buying and stock management systems throughout the regions for sales-team support
An informal retail geo-mapping exercise designed to open up new markets and drive numeric distribution
Investment in the customer experience <Black subheading>
The in-store customer experience remains a priority for Masscash and is part of an overall drive to generate and maintain customer loyalty. This is evidenced as follows:
Focus on re-laying Wholesale stores for a consistent look and feel, as well as for enhanced in-store efficiencies. This includes ranging, POS, store layout, signage, merchandising and category allocations. A prime example of this redesigned look-and-feel is the relaunched Jumbo Crown Mines store
Investment in providing a safe shopping environment for customers, staff and suppliers. This has been applied through a number of initiatives:
Education of suppliers in terms of the legal palletisation of stock and the firmer application of rules and regulations for safe racking and stacking of stock
Food safety: Masscash believes that as consumer expectations increase, food safety will become a strategic differentiator and competitive advantage

8. Expand into Africa
Massmart’s intent is to expand its footprint into Sub-Saharan Africa through the opening of Masscash stores, and other store formats
Masscash Wholesale is currently trading in Africa as Trident (CBW) across 13 stores, contributing 30% of all Massmart non-SA stores (13 of 43)
Divisional Non-SA sales saw +5.7% growth in HY2018 (+0.6% in constant currencies)
Masscash opened one new Wholesale store in Zambia during 2017 and is planning to open another Wholesale outlet, also in Zambia, by December 2020
The ongoing challenge for successful Masscash expansion into Africa remains finding the right properties, as stores are space hungry with a large footprint
A key focus for the division will be to include investments in human capital to support future growth plans

9. Maryla Masojada | Lead Analyst Kate Shirley | New Channels Analyst