Wal-Mart SA entry

Description:

Wal-Mart SA entry

October 20, 2010

Wal-Mart want to entry into South Africa with a R30 billion acquisition of Massmart which will enhance competition and shake up the retail industry in SA.

Wal-Mart coming to South Africa is seen as a positive for local competition.

Wal-Mart's global supply chain structures and distribution systems will result in higher levels of imports, the bigger threat to local producers would come from appliances and heavily processed foods rather than fresh produce and processed foods.

For food, especially fresh produce, Wal-Mart will source supplies from within South Africa. There are already well-established sources of supply.

Massmart sales comprise 53 percent food and liquor, 42 percent general merchandise and 13 percent home improvement, with 288 stores in nine retail and wholesale chains that include Game, Makro and Builders Warehouse.

Gareth Lloyd-Jones, the managing director of food hygiene and sanitation company Eco-Wize, said Wal-Mart's price penetration model, underpinned by imports, could result in South African customs authorities having their hands full with monitoring the safety of imported food products.

Massmart chief executive Grant Pattison said Wal-Mart, as a global competitor, was held to the highest food safety standards. The net effect of Wal-Mart's ownership of any company would improve food safety standards, he said.