From All Africa

Walmart’s recent arrival in South Africa was in many ways like the company’s arrival in any other market: contested and controversial.

Nonetheless it was also a milestone for retailing in the country and for Africa as a whole. Whilst the question of Walmart’s corporate strategies and ethics is paramount for many, the world’s largest retailer setting up on the world’s poorest continent could spur progress in infrastructure as well as improve regional-integration groups’ efforts to counter corruption and improve border crossings.

There may be potential victims amongst South Africa’s retailing and manufacturing sectors, but Walmart’s arrival could bring tangential benefits for consumers across the continent.

The notorious American retailer bought 51% of South Africa’s Massmart in 2011, spending $2.4bn on a company that has 340 stores in 12 sub-Saharan countries. After unions protested, Walmart accepted some restrictions and pledged spending on training programmes for locals, in order to win approval for the acquisition from regulatory authorities.

Even with 15% growth in sales at Massmarts in the last six months of 2012, Walmart’s sales have been underwhelming.

Analysts in South Africa’s investment community had expected faster and bigger increases, but might have overestimated Walmart’s ability to compete in Africa. Or perhaps Walmart needs more time to implement its strategies, such as opening more distribution centers and introducing groceries at some of its stores.

Disbursements have begun from the R240mn fund Walmart was ordered to establish to help local suppliers, but there, too, it seems early for a verdict on whether Walmart’s presence will cause job losses.

For a start, though, Walmart has sent some suppliers to its US headquarters to learn about the company’s buying methods, and South African businesses have already reported closer scrutiny of their existing practices in order to boost efficiency and logistics. One example is night deliveries. They save time and money, but were uncommon previously in South Africa due to nighttime carjackings.

In August 2012, the company announced a $313mn expansion plan in Africa that will add 40 stores on the continent by the end of 2013.

Read more at allafrica.com