MegaMart : A Jamaican retailing giant comes of age
MEGAMART celebtrates its 10th anniversary this month and continues to redefine the retail shopping experience in Jamaica. Its CEO Gassan Azan is regarded as one of the leading business-men in the country and his downtown store Bashco has become a mainstay of Kingston shopping.
The idea for MegaMart began in 1998 when Azan and his partners were looking at the retail landscape in Jamaica and discovered there was no corporately structured retail businesses like the Walmarts and Costcos found in the United States.
One day, on a trip to Hellshire to eat fish, Azan spotted a large track of land which was put up for sale by the Government for developmental purposes. He felt it would be ideal to place one of those large box-like retail mega-stores that were dominating America and spelt the next step in the evolution of the supermarket concept.
Futhermore Portmore accomodated that urban spill from Kingston and was a burgeoning town with an ideal demographic.
He mulled over the idea of putting up one of those big retail structures but it remained just that — an idea. His partners took it one step futher, suggesting that if he was serious about it they would like to participate in this new ventutre. It was then that he decided to give it a shot. Making financial projections, Azan estimated the project could be completed for US$2 million. It came in at five times that figure!
Given the investment climate at the time, it proved difficult to find banking institutions that would provide adequate financing for this retail concept that was completely new to Jamaica. This forced Azan and his partners to go the full equity route, which only served to stiffen their resolve. They contracted the services of the architects Bob Fowler & Associates, who were new to this kind of structure which in effect meant housing 13 seperate businesses under one roof.
“For the first two years we lost our shirts learning the business. We had to know about running a bakery , a pharmacy, household appliances. What I took away from those years is that you have to stick to your guns and follow your convictions and somehow it all works out,” recounts Megamart’s CEO. By the second store opening, which took place in the middle of the first decade of the 21st century in Kingston, on Waterloo Road, Bank Of Nova Scotia (BNS) came on board.
“I am eternally grateful that BNS believed in us and understood what we were trying to accomplish. They had faith in us and gave us invaluable support. The financing they provided for the Kingston store allowed us to take MegaMart to an altogether different dimension.We always had it in mind to become both a national and regional chain,” said Azan.
As one of the country’s leading shopping retailers, Azan is gracious enough to impart some words of wisdom. He surmises that borrowing and leveraging to expand a business is a sure way to calamity. He sees equity and reinvesting as the way to go. In fact, he says that he has never been paid a dividend from MegaMart in ten years.
He has reinvested profits as he goes along and continues to build a rock-solid reputation as a retailer who can be relied upon to deliver. But it wasn’t always so. In the early days suppliers were reticent about giving credit terms, but Azan won them over as they became impressed with his operations. “Waterloo Road really exposed us to upper St Andrew and its consumption patterns. This helped to give us a huge cash boost when we opened there. For the most part, Portmore is mostly lower-middle class with a different consumption pattern. People of Portmore do not tend to have a lot of disposable income. With all our stores we insist on cleanliness, customer service, and a wide product offering. The ambiance is one that is conducive to retail therapy, for want of a better word!
Unlike PriceSmart, MegaMart doesn’t have the feel of a warehouse.
“I wouldn’t say the climate has been an easy one to operate in but, nevertheless, the running and operating of MegaMart over the last ten years has been quite an adventure and we continue to produce better results year after year,”Azan noted.
Last year Azan opened the third MegaMart store in Montego Bay and yesterday celebrated the brand’s tenth anniversary with a special event at the branch with Prime Minister Bruce Golding as the special guest speaker. That store proved particularly challenging, with landlords unwilling to invest in the structure as they do in both the United States and the United Kingdom. There, it is not uncommon for pension funds to build a structure for the retailer thus guaranteeing a rate of return on the rent. This means that Azan and his partners have had to finance the buildings themselves which is a capital-intensive excercise.
In Jamaica, landlords will not take a risk on the kind of square footage MegaMart sits on with just one tenant. As a result, it sucks a lot of cash flow back into reinvesting.The MegaMart boss prides himself on running shipshape stores, with significant investment going into retooling and maintenance.
As he says: “The idea is that everytime customers come in they must be given the impression that this is a new facility, that is clean, well-kept and well-stocked. These are things we insist upon. It has paid off because the customer loyalty is now a hallmark of MegaMart.
In the first year, we started with membership-only, but not many people wanted to renew their membership and so the CEO modified the programme to one of loyalty. In other words, loyal customers became friends with benefits, such as cash rebates which comes in handy at Christmas time.
Next Friday in Caribbean Business Report: Expansion