Business
Sub-Saharan Africa Becomes Walmart’s New Battleground
On the other hand, some analysts believe that the failed deal represents a significant obstacle for Walmart’s expansion plans. As the World Bank predicts a 4.9 percent growth for the Sub-Saharan region in 2013, topping 2012’s 4.2 percent, it seems that speculation will continue across Africa’s promising grocery chain markets.
Cheap food to conquer the world
To all intents and purposes, it would seem that Walmart, albeit dressed in its shiny Massmart clothes, is losing the battle against Shoprite in Sub-Saharan Africa. However, in the grand scheme of things, there are some signs that point to the multinational giant’s imminent success.
At the Consumer Goods Council of South Africa Summit 2013, held in mid October in Johannesburg, a Kantar Retail research spokesperson observed that GAME, Massmart´s signature store chain, bears many similarities to what Wal-Mart was like 15 years ago. Walmart´s strategy back then was to make extremely low-cost food available to the public. According to researchers, this is what lead Walmart to the top worldwide, and they believe that it will take much less than 15 years for the strategy to make an impact in Africa.
Shoprite fights back
Shoprite seems to be well aware of its competitor’s master plan. In fact, the chain has succeeded in stopping GAME stores from trading food products at the Cape Gate shopping centre in Cape Town. Invoking an exclusivity clause in the lease of its stores in the same mall, Shoprite embarked on a legal battle to protect its interests not only in Cape Town, but, ultimately. across the whole Sub-Saharan region.
It would seem that even its most competitive rival believes that Walmart’s expansion over Africa is quite inevitable. Shoprite´s fear appears metaphorically clear when one considers that the retail chain is dreading competition from a store that dedicates only 250 square meters to perishable food products, while it boasts 5683 square meters of food aisles in the same location.
According to Massmart´s head of corporate affairs Brian Leroni, “Shoprite’s action is one which pits them against consumer interest in that it is a measure designed to protect their market share by preventing new entrants from competing against them in the food and grocery market..it is interesting that Shoprite, the largest player in food retail, is the only retailer that has to the best of our knowledge sought to enforce exclusivity clauses to prevent Massmart from competing against them.”
In its application to the Court, Shoprite claimed that it would “lose sales and suffer financial loss if Game is permitted to trade as a general supermarket and grocery store, as well as a liquor store, at the center”. The court ruling, which came out in late October was in favor of Shoprite.
