Colossus of shopping

By admin
07 October 2010

It’s the world’s biggest retail group, with buying power that makes it feared among competitors. Annual sales are three times SA’s national budget, four of its founders’ relatives are among the world’s top 20 billionaires and if this retailer were a country it would be among the 30 top economies internationally.

Now it has its sights set on South Africa. Yup, American giant Walmart aims to do business here.

Although economists and business leaders are jubilant there’s concern the “Beast of Bentonville” could hurt local workers, suppliers and manufacturers. Trade union federation Cosatu (Congress of South African Trade Unions) is already seeking a campaign against the “Walmartisation” of our retail sector.

The mere fact Walmart wants to come to SA should make South Africans feel good. It says good things about the current state of our economy. Its entry into a country is often a sign that nation’s economy will grow.

Find love now! Click here. Thirteen of the countries where this group, which has its headquarters in Bentonville, Arkansas, have started trading in the past 20 years have experienced an economic upsurge. So it seems it has a good sense of economic growth.

It has offered about R30 billion for South Africa’s Massmart group, which includes Game, Makro, Dion Wired and Builder’s Warehouse. Massmart has about 290 shops in 14 African countries, the vast majority in South Africa.

In its enormous Supercentres in the USA Walmart stocks everything from electronics and clothes to beauty products and health services such as inexpensive prescription medicines.

The Massmart offer is a good opportunity to help people in Africa save money in line with Walmart’s overall mission, says Doug McMillon, who heads Walmart International.

Efficient Group economist Dawie Roodt agrees.

“To consumers it will probably mean more product variety and lower prices,” he says.

But SA firms can’t hope to compete with Walmart’s buying power, says Mike Schussler of Economists.co.za in Johannesburg. Walmart could make things difficult for local groups such as Shoprite and Pick n Pay, not so much in the area of food but with durable goods such as TVs, he says.

Greater competition will affect bigger players.

“But Shop-rite and Pick n Pay are well-managed and they know the SA and African environment well. I don’t think they’ll easily give up their position,” Roodt says.

“I think they will be a South African company here but with a generous dose of American entrepreneurship.”

Find out more about Walmart in YOU, 14 October 2010.

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