Earlier this year Massmart opened an experimental clearance outlet called ‘The Last Chance Store’ in response to customer research that highlighted exceptionally high consumer demand for quality hard goods at basement bargain prices.
And the outlet has turned out to be a real winner amongst consumers and landlords. Set-up as a clearance outlet the store sells good quality, slow to sell, non-food products at deeply discounted prices. Commenting, Katherine Madley Massmart’s Marketing Vice President says, “The South African consumer is under considerable economic pressure, certainly amongst the worst that we have seen in a long time. This has resulted in keen price sensitivity to home essentials products whilst also eroding discretionary spending on non-food products, like appliances.”
Massmart has responded to this situation in a variety of ways and the consumer has noticed. Makro has been recognised for three straight months for having the lowest cost basket on a basket of grocery essentials by The Outlier, Game has invested in the price of home essentials resulting in high double digit sales growth and the The Last Chance Store is proving to be an absolute hit amongst mall based consumers of hard goods.
Massmart has specifically located the The Last Chance Store alongside Game because it has particular appeal for the Game customer. The idea of clearance outlets is not new in retail and Massmart does, from time-to-time, clear products through clearance outlets. This store is differentiated because it has been branded (The Last Chance Store), is located in a regional mall versus more traditional locations such as strip malls and the product range is carefully curated. But it’s not an anything goes store, rather the product selection comprises in-demand products that consumers are prepared to forgo at normal retail prices. Discounts in the store range from 30% to 60% and include products such as party consumables, small appliances, TVs and tools.
Madley adds, “There can be a misconception around clearance stock being damaged or inferior. This is not the case in our Last Chance Store where we are discounting stock that is slow to sell simply because under-pressure consumers can’t afford to purchase it at normal retail prices.” Massmart will continue a limited trial of the concept before deciding on further investment in the idea.
