In an interview with Business Times, Andy Bond, Walmart’s executive vice-president responsible for UK and Africa operations, said Walmart chose SA as the preferred country to expand the group’s operations before looking for a local partner.
“South Africa is a true emerging economy in our view, the demographics and the economics of the country are very good for us,” Bond said.
“And we particularly like the fact that there is an under-serviced customer at the moment that’s emerging out of being underprivileged in the past, and we have great experience of helping those customers and at the same time making good business for ourselves.”
The retailer, based in Bentonville, Arkansas, aims to grow Massmart’s food business should it be successful in acquiring Africa’s third-largest retailer.
Bond said Walmart likes the fact that Massmart has a good – albeit small – platform for growth in Africa.
Massmart, the owner of Makro, Game and Dion Wired stores, has a presence in 14 countries in sub-Saharan Africa, with 288 stores.
Walmart’s offer amounts to only 2% of its own market capitalisation, or just over 17% of this year’s operating income. The deal is therefore not material for the massive multinational group, but it is of strategic importance.
Bond and Massmart managers have met labour unions to try to ease fears about possible job losses. The group said it will create jobs.