Massmart initiative paying off for SMEs
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The focus on growing black-owned small and medium-sized enterprises (SMEs) through the introduction of Massmart’s development fund supply chain is now starting to pay off as the supermarket retail giant is using more local brands.
In 2012 the US supermarket giant Walmart’s attempt to buy a 51% share in Massmart for R16.5bn was met with massive resistance, especially from trade unions who said that the takeover of Walmart would result in retrenchments.
The takeover was cleared by the Competition Appeal Court which said the merger of the two firms could go ahead only if there was an investment of up to R200m over the next five years focusing on benefiting most SME suppliers from Massmart-Walmart’s expertise.
As a result, Massmart established a R200m development fund to help developing South African local manufacturers to improve their local procurement and supply chain regime and the initiative is now reaping rewards.
According to Massmart, more and more local brands are being listed and sold in Massmart stores as the supplier development programme gains traction.
Sherry-Lee Singh, Massmart’s supplier development manager, said to date they had helped 162 smallholder farmers, 19 developing wine brands, and five SME manufacturing suppliers whose products include paint, adhesives, pottery and cosmetics.
She said consumers were starting to gain awareness of these products.
“Choosing the right supplier is critical and making the effort to keep in contact and visiting them is very important.”
According to Singh, Massmart is working on labelling to make its customers aware of local products so they too can contribute in growing local businesses, especially black-owned enterprises.
To date, Massmart-Walmart saved South African consumers more than R250m through a series of extended price cut promotions which have allowed consumers to purchase a broad range of items at reduced prices.
Vusi Silora, one of the entrepreneurs listed on Massmart’s local supply chain and CEO of Bio Lotion, said it wasn’t easy to introduce their products into the market place because as a new entrant they used to be blocked by the dominance of the giants.
“We couldn’t have achieved this without the help of Massmart’s supplier development fund.
“The fund has assisted Bio Lotion with listing its products in Massmart stores, including Makro, Game and seven Jumbo Cash & Carry stores,” Silora said.
An entrepreneur who specialises in farming, Kobela Mokgohloa, said since working with Massmart in 2012 the supermarket giant provided vital support by giving free access to interest-free financial support.
“Massmart is a growing business and many SMEs will grow under their wings.”