Massmart Annual Report 2008

There are far fewer prospects for children left behind by the high-tech revolution.


That's why we're helping to put something real on their desktops.
Learners at Beaulah Combined School in Port Shepstone

Fujitsu Siemens sponsored a Computer Centre at the Beaulah Combined School in port Shepstone.



We strive to provide our suppliers with a reliable, highly competitive channel to sub-Saharan African markets in a manner that balances our commercial imperative with our commitment to responsible business practice. It is material to our long term sustainability to encourage suppliers to embrace responsible business practices.

Supplier satisfaction scorecard

Sustainability indicator 2008 2007 2006
Total number of listed merchandise suppliers 8 677 9 390
% favourable supplier perceptions of Massmart distribution 53,0 92,0 100,0
channel efficiency      
% favourable supplier perceptions of Massmart 67,0 71,0 91,0
stewardship of their brands      
% favourable supplier perceptions of Massmart 67,0 71,0 97,0
responsiveness to market opportunities      
% favourable supplier perceptions of Massmart fairness in 63,0 67,0 94,0
procurement negotiations      
% favourable supplier perceptions of Massmart ethics 77,0 88,0 100,0
Group procurement statistics
2008 Number of vendors Procurement value (Bn)
Local procurement 3 689 33,6
Direct imports 243 1,6

2008 Feedback

Explore implementation of enhanced product assurance protocols for products sourced directly from the Far East.
A process has been formulated to enhance the quality assurance process for foreign-based suppliers. The process will involve launching an independent quality verification initiative covering selected private label products.

Conduct workshops with Chinese-based direct import suppliers to address supply chain inefficiencies and legislative compliance.
We hosted workshops in Shanghai, Xiamen, Taipei, Hong Kong and Shenzhen with 32 of our suppliers who represent 68,9% of our import volume.

2009 Priorities

 Appoint an external specialist to conduct a pilot Social Sustainability Audit of selected Garden Master private label suppliers based in the Far East.

Appoint an external specialist to conduct ongoing independent quality assurance of selected Garden Master and Trojan private label products sourced from the Far East.


Building sustainability into our supply chain

We are increasingly finding common ground with responsible suppliers. Many of them are as concerned as we are by the environmental challenges facing our planet, the need to create an equitable post-apartheid society and the need to improve the lives of the poorest South Africans. This shared understanding builds stronger commercial relationships in non-confrontational circumstances where the common good is the common goal.

As our relationships with suppliers evolve, we will increasingly make use of procurement policies that reinforce our preference for doing business with responsible companies. These are suppliers who demonstrate their willingness to build the principles of corporate responsibility into their pursuit of commercial success.

Social upliftment in partnership with like-minded suppliers

It is estimated that there are 1,7 million children orphaned by Aids in South Africa, and many are HIV-positive themselves. It’s essential to improve the quality of life for these children which is why we donated R1 000 000 to Aids charities such as Starfish Foundation and Tomorrow Trust during 2008.

We have discovered that we share common ground with a number of our suppliers who have similar concerns about the impact of HIV/Aids. We have therefore sought to work with these suppliers outside the parameters of our commercial relationship and in the interests of the social good. One ongoing example is the response we’d had to a request from a non-profit condom supplier, Society for Family Health, for favourable trading terms to enable them to bring affordable condoms to market.

Another opportunity involves partnering with suppliers who encourage staff volunteerism through a policy of staff volunteer days. For example, when our brand development consultants, HKLM, undertook a staff volunteerism project to build a playground for children living with Aids at the Cotlands abandoned and vulnerable baby sanctuary, we agreed to donate the merchandise required to implement the project.

By the same token, when one of our staff members was approached by Beaulah Combined Primary School in Oshabeni on the Natal south coast for assistance in equipping a computer centre, our team turned to Fujitsu Siemens for assistance. Their response was to equip the school with a full computer centre – another good example of how a shared sense of compassion between two corporate entities can improve the lives of others. There is more to these opportunities than just doing good. They also build mutual respect and a sense of shared agenda with business partners beyond the tension that can sometimes characterise purely commercial relationships.

Rejecting uncompetitive practice

Despite our desire to work with like-minded suppliers in the interests of social upliftment, there are times when the business community, through its actions, damages public perceptions and increases public cynicism. We were therefore dismayed at the price-fixing allegations that implicated some of our key food suppliers, not only because such activity is morally indefensible in the context of food security in South Africa, but also because it raises questions about the integrity of their negotiations with us. Retail is a fiercely competitive industry and while it is difficult for individual retailers to censure suppliers who engage in uncompetitive practice, we applaud the Competition Commission’s efforts to do so.


Better informed for a global supply chain

Like all large retailers, our stores carry products procured from all over the world. Manufacturing practices in other countries do not always comply with global environmental and human rights standards and we worry about the risk of inadvertently procuring product from suppliers who don’t comply with accepted standards of conduct. While our suppliers are required to demonstrate their efforts to comply with a variety of corporate responsibility standards, we recognise that we have the option of assuming a bigger role in monitoring their actual compliance. With this in mind, we have decided to explore opportunities to introduce a third-party human rights and environmental verification process for a selection of products that are imported directly by Massmart.