Africa set for retail growth

26 August 2013
JOHANNESBURG: Major regional retail chains are seeking to capitalise on the rapid growth of the sub-Saharan African economy by expanding their operations with Walmart's South African subsidiary becoming the latest to announce growth plans.

Massmart, the Johannesburg-based retail group in which US multinational Walmart has a 51% stake, said it plans to open 90 new stores across the region over the next three years.

It plans to target the growing markets of Nigeria and Angola and also to expand in East Africa by adding more brands from Walmart's outlets elsewhere in the world and by increasing its physical presence. This could include a joint venture with retailers in Kenya.

Massmart chief executive Grant Pattison said the company, which has 359 stores in the region, would seek to acquire food retailers and "slightly shift" its focus away from South Africa.

But the company will continue to concentrate most of its resources on its home market, leading some observers to question whether it could be left behind, especially after Shoprite, South Africa's largest retailer, this week also announced ambitious plans for expansion.

Shoprite currently runs 153 supermarkets outside of South Africa and its chief executive, Whitey Basson, said it could double that number within four years. He also said the company wanted to build its presence in Nigeria to up to 800 stores.

Massmart, the owner of local brands Makro and Builders' Warehouse, like its peers, is targeting African cities for expansion as an emerging middle class drives growth and demand for quality brands and modern goods.

The IMF forecasts that the region will account for five of the world's fastest-growing economies by 2018 and this growth is not solely attracting retailers.

Major corporations, such as General Electric and Ford, are increasingly focussing on the region, while leading international hotel chains are also expanding their presence, as reported by Warc last month.

Hilton is seeking to build over 6,000 rooms in 23 hotels while Marriott has plans for 3,900 rooms in 22 hotels.

Data sourced from Wall Street Journal, Independent Online, Reuters, BDlive; additional content by Warc staff
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