Walmart’s $4 billion (about R28 billion) bid for South African retailer Massmart

LAGOS/JOHANNESBURG — Giant U.S. retailer Walmart’s $4 billion (about R28 billion) bid for South African retailer Massmart could be just the first step by global retailers who are currently jockeying for a strong position in Africa.

The move by Walmart to buy Massmart turns the spotlight on local competitors Shoprite and Pick n Pay.
Walmart and rivals Carrefour, Tesco and Metro are likely to look beyond South Africa to establish a presence across the continent.

“Africa has been the big missing component of every major retailer’s emerging market strategy,” said Bryan Roberts, an analyst at UK-based Planet Retail.

Growth rates of seven percent or more in many frontier African countries put South Africa’s relatively pedestrian projected expansion of two to three percent in the shade.

Coupled with the gradual emergence of a middle-class after a decade of robust growth and relative political stability, the logic of a “scramble for Africa” by major international retailers becomes compelling.
Walmart regional executive Andy Bond admitted such thinking existed in the Massmart deal, telling Reuters that South Africa was “very much a gateway” to the rest of southern Africa.

Beyond its 232 outlets in South Africa, Massmart’s Game and Makro low-margin, high-turnover operations are represented by 24 stores in 13 African countries. — Reuters.