The arrival of a big international retail brand in South Africa is always interesting to consumers.
Over the years, McDonald’s, The Body Shop, Burger King, Starbucks, Krispy Kreme, H&M and Zara, and more recently Amazon, have all launched locally. Now it’s Walmart’s turn; the world’s largest retailer is preparing to launch its own branded stores in South Africa.
The big question is what Walmart will offer that’s different in a market already crowded with retailers, where consumers are under pressure and online shopping gives access to almost anything. Unlike other foreign would-be conquerors, Walmart already has a presence in South Africa. Will it rebrand the Massmart stores, among them Makro and Game, which it already owns? Massmart Wholesale also runs the Builders, Jumbo and Shield brands.
Trade Intelligence insights lead Andrea Slabber says there’s a halo of excitement around Walmart’s brand, but uncertainty remains about which ranges it will bring in. “Value for money is something it drives, which South African shoppers will love.”
Slabber believes Walmart may stand a stronger chance with its own brand than by working through Game. Walmart initially bought into Massmart for a foothold in Africa, “but that strategy hasn’t worked”, she says. Game struggled to adapt to a shifting shopper landscape. “At some point Game dominated the baby category as the most relevant retailer for baby shopping. But it was outsmarted by the likes of Clicks.”
Part of the problem was confusion about Game’s identity. The chain expanded into groceries, catered for traders by offering bulk food packs alongside general merchandise and even introduced apparel — all of which blurred its positioning. “It wasn’t sure who the Game shopper was,” says Slabber.
Private labels, she believes, could have the biggest impact. But Game’s future is uncertain. “I would be surprised if Game as a trading brand survived. After repeated attempts to revive it, we haven’t seen evidence of it landing with the shopper. I think Game has lost relevance.”
Massmart’s retail formats overlap in certain areas, but each has a distinct focus. Game targets middle-income families seeking value in electronics, appliances and basic groceries. Like Builders, it’s positioned as a retail trading brand. Makro is a wholesale business — it overlaps with Game in appliances and electronics but is positioned more towards bulk value and business shoppers. Builders specialises in DIY, home improvement and building supplies, while the group’s wholesale formats serve small traders and independent retailers rather than end consumers.
Value for money is something Walmart drives, which South African shoppers will love
— Andrea Slabber
Walmart bought 51% of Massmart in 2011 for R16.5bn. It paid another R6.4bn in 2022 for the remaining shares, and took the group private.
Slabber points to Checkers Hyper and Takealot as Walmart’s biggest competitors from a general merchandise perspective, with Shoprite and Pick n Pay dominating groceries.
Sasfin Wealth senior equity analyst Alec Abraham says Walmart itself may not know whether it will rebrand existing stores. “Some upper-income consumers may know the Walmart brand, but for many Game customers it’s an unknown. It may gauge the reception over time.”
For now, Abraham expects the group to retain multiple brands as a “good defensive strategy”. He says there will be an initial buzz around the Walmart name; the stores are likely to see foot count as people come to look at what the offering is like. “But to make a success of it, it needs to differentiate itself from all the other stores in South Africa.”
The impact will depend entirely on what Walmart chooses to stock. Abraham points to Amazon’s muted local debut. “Amazon has been a huge disappointment for local shoppers — the range isn’t different, and the store face is underwhelming. If Walmart looks just like Makro with different livery, the excitement won’t last.”
He doesn’t foresee a “space race” for retail sites or higher rentals, and expects a selective rollout. “Walmart could always convert some existing stores in locations it wants. And we’ve seen its influence already in the improved Makro online offering.”
The push to launch the Walmart brand locally follows the group’s first “growth summit” in Joburg in April, which attracted small and medium suppliers from 12 countries on the continent.
Walmart International president and CEO Kathryn McLay says the new South African stores will offer “a wide range of merchandise, including fresh groceries, household essentials, apparel and technology”, with global brands in bright, well-designed stores with wide aisles.
It won’t be the first time Massmart has gone into fresh food: Game made an unsuccessful foray into fresh groceries a few years ago. The selection was limited when compared with competitors, and challenges such as margins, competition, supply chain issues, brand perception and store formats outweighed the benefits.
Some Game stores in shopping centres are being considered for conversion to small-format Makro stores. A pilot programme was announced in April last year but nothing further has been communicated about this. Landlord SA Corporate Real Estate noted the conversion of the Game store at East Point Shopping Centre in Boksburg to a Makro Express in an investor presentation earlier this year.
It’s not clear how Walmart, Makro and Makro Express will compete. Meanwhile, sites for Walmart-branded stores are being developed and official opening dates are expected to be announced next month.
Walmart serves about 270-million customers weekly through more than 10,700 stores and e-commerce websites in 19 countries, and employs about 2.1-million people.
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