Game: Competing in Africa’s Playing Fields Game is one of South Africa’s largest retail stores. It consists of 93 large-

[answerhappygod]

Game: Competing in Africa’s Playing Fields
Game is one of South Africa’s largest retail stores. It consists
of 93 large-format stores and thinks of itself as a driven discount
cash retailer of consumer goods and general merchandise, electrical
appliances, and non-perishable items for home, leisure, and
business use. As a discount cash retailer, Game has a high-volume,
low-margin operating model that depends on making a high volume of
sales at a lower price as well as on a sound and consistent
promotional strategy.
Game started expanding into Africa in the early 1990s when it
realized that its South African market would mature quickly and
that there was little space for investment in the already
over-traded market. Recognizing the retail market potential of the
neighboring Southern African countries, Game started investing in
Africa by
opening its first store in Botswana in 1993. It was only when
the company decided to invest further afield, specifically in
Uganda (2004), Nigeria (2005), Tanzania (2006), and Ghana (2007),
that the reality of Africa kicked in. The opening of the Nigeria
store was known to be a bit of a disaster after the first container
of stock was held up for nine months at the local customs office
because of Game’s refusal to submit to bribery.
By 2010, Game had a presence in 11 African countries and was
planning to expand its footprint in Africa in another six countries
over the next five years. Game had found that it could not simply
cut and paste its South African business model into other African
contexts. The company therefore had a separate business plan and
business model for every country. For example, whereas in South
Africa every store stocked 12,000 active products, some remote
African stores such as Game Kampala had only 8,000. This was
because the logistics of supplying the full range of products was
prohibitive and Game realized that the market was satisfied with a
slightly more limited choice. Game also had to make a “fundamental
mind shift” to think smaller when doing business in Africa.
Shopping centers were an unknown concept in most African countries,
so Game opted for stand-alone stores in most instances, and in some
countries it developed its own small shopping centers, consisting
of one or two anchor shops and a few other outlets. Still, securing
financing from the local banks proved to be trying, as the bank
officials did not understand the concept of a shopping mall, having
only had to finance ventures like roads and bridges in the past.
Regarding the supply chain to the African countries, until about
three or four years before, all distribution of stock had been
managed centrally from South Africa. Game’s experience in Nigeria
changed this. While it was never part of the original procurement
model, Game decided it was best to turn to local suppliers in
Nigeria because restrictions on certain imported products meant
that even one restricted product could hold a whole container back.
In other countries, however, Game imported up to 90 percent of its
stock from South Africa without any major difficulties. Logistical
challenges were the order of the day for Game in Africa. A large
portion of its goods had to be transported by road, but getting
those goods to certain countries meant that in some cases truck
drivers had to cross five different borders. The drivers therefore
had to build up good relations with the various border officials to
speed up the process, particularly because Game incentivized the
drivers with bonuses if they were able to deliver the goods on
time.
By 2010, it had become evident that despite the risks, it was
indeed very profitable for the company to invest in Africa. Game
stores in Africa generated far higher profit and return on
investment than their South African counterparts. To date, Game
has
been fortunate not to have had serious competition from
international players, although the company did face some
competition from the other South African-based supermarket
retailer, Shoprite Holdings, as well as the informal market.
However, Game expected a complete change in the African business
landscape and foresaw that more and more international businesses
would start realizing the investment potential of Africa. The
company was fairly convinced that big multinational players such as
Wal-Mart and Carrefour, which had previously shied away from
investing in Africa, would form partnerships with existing
investors in Africa rather than risk going alone.
Questions