One of the advantages of being owned by a giant in the global retail industry, says Brian Leroni Massmart corporate affairs executive, is being able to tap into Walmart’s extensive experience, supply chain and operational expertise.
This, Leroni says, played a large role in the local retailer’s decision to try their hand in food retail in West Africa – a region currently dominated by the Shoprite Group.
“Our presence in African countries outside of South Africa, including West Africa has typically been through Game stores. However, we have initiated a pilot test of a new, small supermarket format in Lagos. It is only more recently, under Walmart’s guidance and leveraging their supply chain and buying expertise, that we have begun to focus on a retail food proposition,” he says.
This month the retailer launched a new low-income supermarket called Value Mart – a model designed specifically for the Nigerian and West Africa markets.
Where other major retailers have made the fatal mistake of failing to adapt their service offering to suit the economic, political and environmental elements of the region, Massmart has been careful not to commit the same offence.
Woolworths famously withdrew their operations at two sites in Nigeria late last year as they grappled with high rental costs and logistical challenges that resulted in operations there becoming financially unviable.
Dr Lyal White, economist and director of the Gordon Institute of Business Science’s (Gibs) Centre for Dynamic Markets says a ‘one-size-fits-all’ approach to the West African market, and particularly Nigeria, will never work because the operating environment, aspirations and consumer needs differ from region to region. Instead, retailers or businesses trying to expand into various African regions requires a “granular approach”.
“We are respectful of the fact that consumer expectation and preferences can vary from country to country. We therefore appreciate the need to develop a careful understanding of consumer needs and adapt our formats and merchandise ranges to meet those needs. Specifically, we don’t adopt an approach that stipulates rolling out what is successful in one country to another,” says Leroni.
Depending on the success of the pilot supermarket, Massmart plan on rolling out 10 stores in the next two years in the region, with the second store expected to launch later this year. They’ll also be opening a new store in Namibia and Mozambique as well as 22 new stores in South Africa.
While Leroni won’t divulge the company’s market share targets, they are no doubt aiming to penetrate a market largely dominated by the Shoprite Group. Last year Shoprite’s sales outside of South Africa grew by almost 30% and trading profit on the continent accounted for 11,4% (R613 million) of their multi-billion-rand profit share.
In addition to the food retail venture in West Africa, Massmart will also be rolling out the Builder’s Warehouse brand in Zambia and Mozambique.
Time will tell whether the new kid on the block has what it takes to knock the leading low-income food retailer off its perch, but from what’s been tabled thus far, it’s game on!