By Thebe Mabanga
Walmart’s announcement that it will open its branded stores in South Africa in the last quarter of this year is not only the logical progression of its 2022 decision to acquire 100% of Massmart and delist.
It also fulfills the company’s original intention when it first acquired 51% of Massmart back in 2010.
The move comes as no surprise.
The global retail giant has long signaled its plan to use South Africa as a launchpad into the rest of the continent, through both bricks-and-mortar stores and e-commerce.
Its strategy places emphasis on sourcing from local suppliers, a point reinforced earlier this year when Walmart hosted a supplier expo showcasing the depth and potential of African producers.
Back in 2010, Walmart faced stiff opposition both locally and globally.
It opted for a cautious entry, taking a 51% stake while retaining the Massmart brand and its subsidiaries, placing a moratorium on retrenchments, and creating the R100 million Massmart Supplier Fund under former Black Management Forum MD Mncane Mthunzi.
Walmart’s scale is unmatched. According to Deloitte’s Powers of Global Retail report, which ranks the world’s top 250 retailers by revenue, Walmart retained its number-one spot in the 2023 financial year with revenue of $648.2 billion—more than double second-placed Amazon at $251.9 billion.
Yet two key metrics remain below par: Walmart operates in just 19 countries, and only 31.8% of its revenue comes from foreign markets.
By bringing its own brand to South Africa, Walmart aims to change that. In a post-Covid world where financial resilience matters more than ever, the company is stepping out from behind Massmart to face competitors head-on.
The strategy will see Walmart replace Massmart store brands such as Game and Builders Warehouse with its own.
While Makro remains a successful wholesale player, it does not directly compete with Shoprite, Pick n Pay, or Spar.
Game, although beloved, never threatened the dominance of major retailers, even after diversifying into groceries under Walmart’s ownership. Now Walmart itself will enter the fray—first in South Africa, then potentially across Africa.
Armed with unmatched buying power and economies of scale, Walmart can undercut competitors and potentially trigger a price war. Competition authorities will need to stay alert.
The local market will not be easy to crack: Shoprite has entrenched itself in the middle-class segment, while Massmart effectively conceded the lower end when it sold Cambridge Foods and Rhino Cash & Carry to Shoprite in 2023.
At the entry-level, Walmart will face newly listed Boxer, the crown jewel of a struggling Pick n Pay now led by retail veteran Sean Summers, whose earlier tenure (1999–2007) was defined by his personal visits to every store in the chain.
Walmart will breathe a sigh of relief that Whitey Basson of Shoprite has left the game, or he would relish the prospect of taking them on.
Lastly, Walmart would be advised to move with caution as they venture into the continent and would be well advised to listen to one of their own former executives.
When Walmart took over Massmart, they found Grant Pattison in place as CEO.
Pattison then left to head up Edcon and try and lead the clothing retailer into the continent.
He found the going tough and discovered that African economies have fragmented and low average incomes to sustain and while the likes of Shoprite retain presence on the continent.
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