Wal-Mart coming to SA

[annman]

That's actually a relief. Means they're bringing secondary sector jobs to SA, without harming locally owned and operated franchises, stores and manufacturers.

I see a lot of comment above has said, "They bring jobs, they bring jobs." But, even though they are the largest employer in the US, as they so proudly advertise, has anyone done the research as to how many people they have made jobless through small-business insolvencies, manufacturers being squeezed out and towns running empty, due to their big-box retail philosophy on the outskirts?

Easy to make a quick reference to jobs, jobs, jobs; less clear when one has to analyze the broader economic impact.

[dysan1]

Why would they have been meeting with a few of the big local retailers and why would those retailers be saying walmart is coming if they were coming to do factories? does not add up. they here to buy plain and simple

[Lydon]

If you google the article now you'll notice that the new24 article has been amended, and now says:

Massmart's chief financial officer Guy Hayward confirmed widespread speculation that Wal-Mart had been "shopping around" late last year.

instead of

The group has also confirmed that Wal-Mart will enter SA.

http://www.fin24.com/articles/defaul...518-24_2573688

[ZATUGA]

Africa: the next frontier

NEW YORK (MarketWatch) — It’s Wal-Mart Stores Inc.’s next step toward world domination.

The retail giant has offered to buy Johannesburg, South Africa-based Massmart Holdings Ltd. for more than $4 billion in a move to jump-start its entry into the fast-growing African market.

Massmart is a top distributor and retailer of consumer goods and general merchandise on the African continent, Wal-Mart said. It runs 290 stores in 13 countries in Africa, with most of its stores in South Africa, and manages eight wholesale and retail chains under a variety of different brand names.


Return of the bolt-on dealSouthwest Airlines will buy AirTran Holdings for $1.4 billion in the first major merger among U.S. discount carriers. Mike Reid and David Weidner discuss.
This is in line with Wal-Mart’s strategy of muscling into new geographical regions by acquiring already-strong players. So far, its fast-growing international arm consists of 4,230 stores and more than 660,000 employees in 15 countries outside the continental U.S.

International is where the action is for Wal-Mart. The world’s largest retailer has seen its domestic growth moderate. Part of that is due to the recession and the market’s maturity, but Wal-Mart also made a few recent missteps — focusing on select discounted items instead of “everyday low prices” and paring back its inventory — that sent some shoppers to its rivals.

Wal-Mart’s track record isn’t perfect. The company had some high-profile failures in Germany and South Korea and has struggled in other markets. But the difficulties haven’t killed its appetite for overseas growth.

“We are continuing to deploy our strategy to accelerate growth and improve returns in our international business, and this region of the world fits with our focus on large, high-growth markets,” said Doug McMillon, president and chief executive officer of Walmart International, in a statement.

Africa is an untapped market where Wal-Mart can unleash its merchandising prowess. It's also a huge and diverse market that could prove challenging to harness. No one said the road to ruling the retail world would be easy.

[ZATUGA]

Wal-Mart bids $4.26 bln for South Africa’s Massmart

NEW YORK (MarketWatch) — Wal-Mart Stores Inc., the world’s No. 1 retailer, made a proposal to buy Massmart Holdings Ltd. for $4.26 billion in its biggest deal in more than 10 years, as it seeks entry into the rapidly growing African market.

Wal-Mart’s proposed offer for the South Africa-based retailer is 148 rand or $21.13 a share.

Massmart (ZA:MSM 13,475, +125.00, +0.94%) rallied 11% to 150.20 rand a share in Johannesburg trading.

In the previous session, the shares closed at 134.75 rand, indicating that Wal-Mart /quotes/comstock/13*!wmt/quotes/nls/wmt (WMT 53.67, +0.19, +0.35%) is proposing a 9.8% premium.

Wal-Mart’s stock dropped 0.4% to $53.85 on Monday. The $400 billion-plus retailer has become increasingly reliant on growth from its international markets, about a quarter of its sales, while growth in the U.S. has slowed. Wal-Mart has bought stakes in local operators in markets from Chile to China to help it penetrate the overseas markets. Its key international unit, Asda in the U.K., came from a $10 billion-plus purchase in 1999.

Wal-Mart International operates in 14 countries and Puerto Rico.

Same-store sales at Wal-Mart’s namesake U.S. chain have fallen for five straight quarters, hurt by the persistently high jobless rate and a fragile domestic economy, and by the company’s moves to narrow product assortment that alienated some shoppers.

“Wal-Mart’s proposed acquisition reaffirms the company’s growth and emerging market aspirations,” said Sanford C. Bernstein & Co. analyst Colin McGranahan. “However, we believe that investors may have reservations about the company’s decision to pursue acquisitions in a new part of the world, particularly at such high multiples and when [Wal-Mart’s] own stock is trading at a much lower valuation. Although the acquisition is modest compared to the size of the overall company, it may disappoint people hoping that the company would begin to return more capital to shareholders.”

The analyst also added that he sees “limited potential synergies given Wal-Mart’s lack of presence in the area.”

Massmart operates 290 stores in 13 African countries, but most of them are in South Africa. Read MarketWatch First Take on Wal-Mart’s expansion plans.

Acquiring Massmart would be “a compelling growth opportunity” and would “provide a platform for growth and expansion in other African countries,” said Andy Bond, former chief of Asda and currently an executive vice president with responsibility for the company’s operations in the region including the U.K. and Africa.

Massmart said the proposal is “the beginning of the process and it is difficult to say how long it will take or whether it will lead to an offer.”

Massmart Chief Executive Grant Pattison said that Wal-Mart’s interest “represents a vote of confidence” in South Africa, the firm and its employees.



Massmart Holdings Inc.

Doug McMillon, head of Wal-Mart International, said the purchase “fits with our focus on large, high-growth markets.” The deal would help improve returns at Wal-Mart's international business, he said.

“We respect and honor pre-existing union relationships and are committed to abiding by South African labor laws,” McMillon said.

For the year ended June 27, Massmart reported net income fell 5.4% to 1.21 billion rand, while revenue rose 10% to 47.55 billion rand.

The first half of the fiscal year had been “challenging,” Massmart said in a comment accompanying the report. In early 2010, however, the South African consumer economy appeared to have emerged from “the recession that dominated 2009,” the company said. Second-half headline earnings rose 29% on 14% higher sales, Massmart said.

The proposed deal is subject to conditions including a due-diligence financial review as well as regulatory clearances and a vote of Massmart holders.

[Lydon]

Lord save us all

[Wikkelspies]

Originally Posted by Lydon

Lord save us all

In recent years I've browsed my way around several Walmart emporia in the South-Western United States as well as the UK's Tesco Superstores.

The first thing that strikes you about Walmart is how incredibly cheap things are in the United States. I bought a dual band GSM (North American frequencies) Motorola for $15. This included $10 prepay/PAYG credit, so the phone only cost $5. Not bad considering that it was locked to AT&T/Cingular and useless outside the United States. It served its purpose in avoiding roaming charges in the United States but did not work in Canada where Rogers is totally anal.

Walmart US obviously has exceptionally good relationships with its Chinese suppliers. Given the size of the North American market, and the amount of competition, retailers are not into markups and rip offs and consumers are well placed to get bargains. I am not sure that Walmart could manage such pricing policies in the South African market which is smaller, less competitive and where 75% or more of the people have little or no disposable income after purchasing necessities.

If SA is ready for another retailing giant, then I'd put my money on Tesco. It has the experience of moving into Eastern Europe where large sections of the population live in - by Western European standards - near third-world conditions. In my view South Africa's future is with our traditional market, the UK and the EU. Tesco already stocks an extensive range of South African products and understands the South African context as well as any overseas corporation might.

I do not have shares in Tesco.

[Simfan34]

Arrrgh lord have mercy on you South Africans, you shall be invaded by cheap Chinese goods.

However I would think they would probably come under the TESCO name.

[ZATUGA]

Wal-Mart could lead corporate America into Africa

Wal-Mart has announced that it is prepared to pay approximately $4.2 billion for Massmart Holdings. Massmart Holdings is a Johannesburg-headquartered chain of discount superstores with a grand total of 290 stores in 13 African countries under brand names such as Makro, Game, and Builders Warehouse. Massmart stores can be found as far away as Ghana and Nigeria and there are stores even in President Mugabe's Zimbabwe.

South Africa-China trade ties: President Zuma bids to shore up 'Gateway to China' status
.Massmart would serve as "a fantastic entry point to a broader part of the continent," said Andy Bond, a former CEO of Asda and the man apparently spearheading the purchase. This acquisition, if completed, will be the biggest acquisition undertaken by Wal-Mart in 10 years – and of all places, it’s in Africa. For markets, this could be a game changer, and I venture there are many computer screens in trading floors around the world tracking this transaction very closely.

For quite some time, I have felt that corporate America was missing the Africa story. Like tourists frightened off by rumors of lions prowling the city streets of Nairobi or Lagos, America’s corporate sector has been bamboozled and bogged down in an old African landscape where the only opportunities are to be found in digging up raw materials, and the greatest challenges are with intractable or corrupt government bureaucrats. To be sure, that African landscape still exists, both in mind and in reality.

Sometimes, being the “trusted constable” or the world’s policeman does not allow you to be an entrepreneur.

Last year, India, Inc. completed its second biggest acquisition anywhere, via the purchase by Bharti Airtel of Zain’s mobile phone network. The deal added up to a staggering $10.5 billion. That was quite a statement. China is simply everywhere on the continent, buying up oil reserves and copper mines, and building dams, bridges and roads. But despite all the news of America’s growing military footprint, through the newly established Africa Command, there was not a sniff of America, Inc. It was as if America understood the security and resource games, but that those were the only games in town.

This has changed with Wal-Mart now wanting to put Massmart in its shopping cart. The African continent remains the last frontier of the 21st century. Africa’s resources are vast and still not properly quantified, but the far greater value may be in Africa’s human capital: its consumers.

There are 1 billion souls in Africa, 40 percent of whom live in urban areas, and according to a McKinsey report on Africa’s booming opportunities, Africa already has more middle-class households than India. It’s fitting that a company like Wal-Mart that has always understood the economies of scale is leading the way for America. Africa’s consumer market has scale, and plenty of it.

This will prove a valuable acquisition for Wal-Mart. The company is set to reap an advantage as an early mover. But it won’t be easy. South Africa is a quirky market; its labor force is unionized and combative when compared with the rest of the world. However, when viewed as a “Gateway to Africa,” South Africa is a winner.

With a good deal of its supply coming from China, Wal-Mart will surely be able to take a knife to Massmart’s costs by bringing its scale to bear.

I think this acquisition will be viewed as transformative. And, when the competition sees Wal-Mart’s success, they’ll wish they had been early movers too.

[ZATUGA]

Can Wal-Mart bring happy days to Africa?
South Africa, one of the fastest-growing economic regions in the world, seems a natural place for Wal-Mart to invest, say economists. But South African unions are pushing back.

By Scott Baldauf, Staff writer / September 28, 2010

Johannesburg, South Africa
Can Wal-Mart bring happy days to Africa? South Africa’s top union leaders don't think so, and they're ramping up pressure to make sure the Arkansas-based retail giant fails in its multibillion dollar bid to take over Africa's biggest general merchandise retailer.

Many economists also see Wal-Mart’s entry as a good sign for African consumers, and in particular South Africa’s growing black middle class.

“You’ve got a growing African class of consumers who can afford to buy more consumer goods,” says Aly-Khan Satchu, an independent investments expert and market-watcher from Nairobi. “I think this is going to be a win for Wal-Mart. It shows that corporate America remains nimble and it shows that they are starting to change the way they view Africa, no longer just as a source of commodities and raw materials, but as a market for consumers.”

A 'compelling growth opportunity'
As the most developed country in sub-Saharan Africa, with a stable government and a steady growth rate of 7.5 percent over the past 16 years, South Africa is an attractive base for any company thinking of expanding into Africa, one of the fastest-growing economic regions in the world.

"South Africa presents a compelling growth opportunity for Walmart and offers a platform for growth and expansion in other African countries,” regional head Andy Bond said in a company statement (pdf) announcing the bid to buy Massmart, which owns 290 stores in 13 countries in Africa. “South Africa possesses attractive market dynamics, favorable demographic trends and a growing economy.”

Wal-Mart is used to taking risks. In July 2006, the retail chain shut down all of its 85 stores in Germany after its American model failed to take off with Germany’s quality-conscious consumers. Wal-Mart seems to be having a better run in India, with nearly 140 stores up and running by December 2009, and plans of further expansion. (Watch this time graph of Wal-Mart's domestic and international growth.)

But as a recent three-week-long public-sector strike shows, South Africa is not an easy market to enter. Nearly one-quarter of its 49 million citizens is unemployed; 40 percent live at or below the poverty line.

Labor unions 'alarmed'
The country’s largest trade union, COSATU, which makes up the largest supporter of South Africa’s current ruling left-leaning coalition, has already announced its opposition to Wal-Mart’s entry, and South Africa’s penchant for licenses and other bureaucratic paperwork could very well stall Wal-Mart’s grand opening for months, or more.

In a statement Tuesday, the Congress of South African Trades Unions (COSATU) said it was "alarmed" by the bid and "will oppose the setting up of any Walmart stores."

“Wal-Mart has a reputation for undermining labor standards, and we can expect some of that in South Africa,” adds Tony Ehrenreich, secretary for COSATU in the Western Cape province. “Wal-Mart has the reputation for being a low cost producer of goods, that leads to a dip in domestic South African goods. That will lead to closures in South Africa’s manufacturing sector. This is not good for South Africa.”

South Africa does “have a very high level of interference,” admits independent financial analyst Mr. Satchu, noting the power of South Africa’s trade unions. “I don’t know how Wal-Mart is going to handle that. But it’s important for people to understand the necessity of not missing the boat” on Africa’s growth.

[briker]

Walmart may start price war in SA
Sep 29 2010 16:05

Johannesburg – South African retailers will have to up their game if global retail giant Walmart Stores succeeds in setting up shop in the country. But local consumers may look forward to lower prices.

This is the view of analysts as they consider the likely impact of Walmart acquiring local retailer Massmart Holdings [JSE:MSM].

Announcing the bid on Monday, Doug McMillon, president and CEO of Walmart International, said it was Walmart’s mission to save people money, and the proposed acquisition was a great opportunity to deliver on that mission for all the people in the regions of the African continent where Massmart currently operates.

“The benefit of being big is that you have economies of scale. You can source products cheaper and pass (savings) onto consumers,” said Abri du Plessis, chief investment officer at Gryphon Asset Management. “They (Walmart) are definitely going step up competition. South African retailers will have to sharpen their pencils.”

Du Plessis added Walmart would also beef up Massmart’s product range through its international networks, pushing local competitors to also enhance their offering.

Warren Buys, a portfolio manager at Cadiz Asset Management, said the impact of Walmart’s entry into SA (if it happened) wouldn’t be felt immediately. However, he too expected Massmart prices to be very competitive due to Walmart’s ability to source internationally and its bulk buying power.

That suggests shoppers at Game and Dion Wired, the general merchandise retail brands in the Massmart stable, could see reduced prices if the deal goes ahead – a situation that will surely put pressure on other retailers to follow suit.

“Retailers would feel some pressure on their gross margins if they need to become more price competitive,” said Buys.

Though greater competition is good for consumers, SA already has a very competitive retail industry, reckons Du Plessis, adding margins are actually low.

Prices: Walmart vs Massmart

A quick online comparison of prices at Walmart, Game and Dion Wired raises hopes for local consumers.

Many factors – including transport costs, import duties, different tax rates and the sheer economies of scale offered by the massive US market – complicate such a comparison. But it gives some indication of the price gap on merchandised goods between the retailers.

These prices were published on the retailers’ websites on September 29 2010:

Product : Walmart : Game

LG 42” HD TV : $598 (R4 170) : R7 999

Wii fit Plus : $98.54 (R686) : R1 199

Samsung external– : $119.84 (R835) : R700 (500GB)
640GBhard drive 2.5”


Product : Walmart : Dion Wired

Apple iPods 160GB : $229.54 (R1 600) : R2 600

Kettles : $15 - $40 (R97–R279) : R279 – R749

Laminators : $30- $417 (R209– R2 900) : R169 – R4 000

___________________________________________________________________
yeah, I'm all for competition. Lower prices, more options and better service!

[Kwazimoto]

bring on walmart

[romanSA]

On the other hand, Cosatu are firmly against their possible entry into SA...

-----------------

'Fight Walmartisation'
Article By: Zeenat Moorad
Thu, 30 Sep 2010 3:44

The Congress of South African Trade Unions (Cosatu) on Thursday said it was deeply concerned at the bid by the world's biggest retailer, Wal-Mart, to take over South Africa's Massmart.

The union said that it fully shares the South African Commercial, Catering and Allied Workers Unions' (Saccawu's) view that Wal-Mart is one of the worst union-bashing employers in the world.

This follows Monday's announcement by Massmart that it had received a non-binding proposal from Wal-Mart Stores (Walmart) which could lead to Wal-Mart making a cash offer to acquire the entire issued share capital of Massmart for R148 per share, a deal that could lead to a R32-billion offer for the consumer goods distributor.

Quoting Saccawu, Cosatu said that Wal-Mart is a known anti-union company, which trains its managers to keep the workplaces union-free.

"By July 2008 the company faced more than 80 lawsuits in connection with wages, overtime and hours violations, most of it class actions, with more than 10 000 workers affected in many of the cases. It currently faces the largest class action on discrimination of women with more than 1.5 million women workers being part of the action and it pays women less than men and women are less likely to be promoted than male workers," said Cosatu.

The union also said that Wal-mart has been listed in Human Rights Watch reports for its aggressiveness of its anti-union activities and that it conducts illegal surveillance on its employees to root out any attempts at unionisation.

Cosatu said it was also worried about the impact that a Wal-Mart take-over would have on local distributors, suppliers and manufacturers.

"The company has become so powerful that it can dictate to suppliers the price they are prepared to pay for goods, this has led to many local suppliers, distributors and manufacturers collapsing, and has also led to the use of child labour and payment of poverty wages in countries such as Guatemala and Bangladesh," it said.

The union said that if the deal goes through, it could be a severe set-back for the Proudly South African campaign to persuade retailers to procure products manufactured locally by firms which comply with minimum decent work standards.

Cosatu said it would support any move by Saccawu to refer the take-over to the Competition Commission or the Ministers of Economic Development and Trade and Industry, to ensure that the objectives of South Africa's developmental agenda are not undermined.

"Cosatu and Saccawu will fight against any erosion of hard-fought-for workers' rights and benefits.

We will not tolerate the destruction of local procurement policies or the further decline of local manufacturing. We call on all South Africans to support a campaign against the Walmartisation of the retail sector," the union said.

http://business.iafrica.com/news/677028.html

[JoHaN 15]

Yay, cheap consumer goods

[Wikkelspies]

Originally Posted by romanSA

On the other hand, Cosatu are firmly against their possible entry into SA...

A strange reaction, given that more investment equals more building, more jobs, increased competition and - ultimately - an upsurge in economic activity.

As trade unionists Cosatu may feel threatened by North American employment practices such as paying the same hourly rate 24/7 with no overtime and no loading for weekends and public holidays, no paid leave and no sick leave. The Americans also place a premium on loyalty and productivity.

Walmart will nevertheless have to adapt to local conditions, including South Africa's democratic labour laws which are more in line with those of the EU than North America. I like Walmart in its native environment, but feel that the Brits and the Europeans are better placed to operate in the Southern African context.

Oddly enough, there are others who feel threatened by increased "Americanisation".
http://openforum.mweb.co.za/showflat...ber=1802461327
They must be throwbacks to the 1950s. Retailing went global decades ago. You can travel the world and hang out in shopping malls that look like clones of one another, right down to the brand outlets and the fastfood counters. Just take a look at the monstrosity that is Dubai's passenger terminal.

[BUTEMBO21]

Originally Posted by annman

That's actually a relief. Means they're bringing secondary sector jobs to SA, without harming locally owned and operated franchises, stores and manufacturers.

I see a lot of comment above has said, "They bring jobs, they bring jobs." But, even though they are the largest employer in the US, as they so proudly advertise, has anyone done the research as to how many people they have made jobless through small-business insolvencies, manufacturers being squeezed out and towns running empty, due to their big-box retail philosophy on the outskirts?

Easy to make a quick reference to jobs, jobs, jobs; less clear when one has to analyze the broader economic impact.

I live here in the states, I have worked for Wal-mart before (Electronics department).

Its going to be the start of dooms day for SA manufacturers, local retail industries and make more papa, mama stores bye-bye. Jobless.
A papa mama store/boutique is better than working for Wal destroyer. you get paid a lowest minimal salary and are always under stuffed.

They have Mcdonals, Pharmacies, banks, Car Repair shops, and even selling Cars now days.

How many family owned shops will be out of business? It's a disaster.

Whats worst about them? They will import from China because it's very cheap there than buying Local manufactured goods.

If they buy from locals, they will struggle to keep up with SA retailers and that will be their death.

Wall to succeed in SA they will have to lower their prices . Thats what they do in the US.


God have mercy on SA. Please make Wal-Mart Fail.

[BUTEMBO21]

Originally Posted by annman

Problem is, they do not only drive some prices down, but they put a multitude of local retailers, suppliers and manufacturers out of business. Most of their products are sourced in the cheapest markets (the east); so you may get marginally lower prices, but you get more local businesses going insolvent, local job-losses due to cheap imports, local farmers already struggling being under-cut, textile and clothing companies going bust.

If your product ( who supplies Shoprite and other local retailers ) cost 30-40% more than what Wal-Mart would sell. what do you think Wal-Mart will do? They will go to their Chinese suppliers whom would will sell them 50% less that local supplier, bring it in the country, lower prices and people will follow the one with lower prices because they will save some money.

In the end... people that have no work can't buy anything, no matter how cheap. I'd rather have Shoprite or Pick n Pay prices, than seeing an additional 100,000 out of work.

True .

They will put 100-s of people out of work that were earning more than those who will be hired by Wal-mart. Thats how poverty increases, thats what has been happening in the States.

[dysan1]

There's alot of good and bad with them coming. But to say it will put the local retailers out of business is rubbish. I think it will pressure them to up their games, have broader offerings and offer better prices. We already pay more for msot goods than other countries in Europe or US.

And so what if Walmart will be importing? Our retailers do the exact same thing, very little is locally made

[briker]

yes, local companies have been too complacent for far too long. they lacked proper competition. theyll just have to be more competitive. and im sure govt would limit chinese imports in order to protect local producers.

[Lydon]

Originally Posted by briker

These prices were published on the retailers’ websites on September 29 2010:

Product : Walmart : Game

LG 42” HD TV : $598 (R4 170) : R7 999

Wii fit Plus : $98.54 (R686) : R1 199

Samsung external– : $119.84 (R835) : R700 (500GB)
640GBhard drive 2.5”


Product : Walmart : Dion Wired

Apple iPods 160GB : $229.54 (R1 600) : R2 600

Kettles : $15 - $40 (R97–R279) : R279 – R749

Laminators : $30- $417 (R209– R2 900) : R169 – R4 000

___________________________________________________________________
yeah, I'm all for competition. Lower prices, more options and better service!

It's very unlikely that we'd get those prices at Walmart here, but any price drops are of course welcome. iPod pricing, for example, is largely determined by the useless Core Group.