With some relief for local consumers finally coming through in the form of modest interest rate cuts by the Reserve Bank, this could be a strong festive season.
Local retailers certainly need all the help they can get, as they are up against it. The shopping extravaganza at the end of 2024 was boosted by the two-pot withdrawal system, a one-off injection of liquidity into the consumer market. We won’t depress ourselves by thinking about all those retirement savings flowing into consumer spending and short-term debt reduction.
You can also expect online gambling and sports betting to be squarely in focus this December. Local retailers aren’t just competing with other retailers and cheap imports for the hearts and wallets of consumers. No, they are also up against every other form of entertainment, from travel and alcohol to the many online betting platforms.
To add to the fascinating retail market, the first Walmart-branded store opened in South Africa recently. Clearwater Mall was the chosen venue, with Fourways Mall hot on its heels as host of the second store. As an investor in the Accelerate Property Fund turnaround, I’m particularly pleased to see Fourways Mall on the list.
In both cases, the new Walmart stores are just replacements for Game stores. Reports suggest that the Walmart rollout strategy is a mix of new stores and the replacement of Game outlets. Game has been a headache for the longest time, so this strategy doesn’t surprise me. Personally, I wouldn’t bet on the pink brand having much of a long-term future in South Africa.
Those who took a bet on the most famous name in global retail have been richly rewarded
Much as South Africans may be excited about Walmart’s strategy to double down in this country by bringing its brand here, the reality is that we are barely a rounding error in the international story. But having said that, Walmart’s global businesses have contributed significantly to the strong position that the group finds itself in, even if South Africa hasn’t been nearly as important as markets such as China and India.
Walmart is undergoing a leadership transition as John Furner replaces Doug McMillon as CEO. Furner inherits a strong story, with Walmart’s share price up 23% in 2025 despite it being a year filled with turmoil in global trade. Walmart is trading at levels nearly 40% higher than the 52-week low that was suffered during the worst of the tariff-driven panic earlier this year. Those who took a bet on the most famous name in global retail have been richly rewarded.
Don’t make the mistake of thinking that all retailers have bounced back this strongly. For example, Costco investors have watched the share price wash away in recent months to trade at similar levels to what we saw in March. A victim of its demanding valuation, its relative focus on the US and its weaker omnichannel positioning, Costco is flat year to date. This represents stunning underperformance relative to Walmart by the market darling. Costco remains in the lead over five years (up 145% vs Walmart’s 123%), but that gap is a lot smaller than it used to be.
Walmart’s international segment has continued its strong run in the latest quarter, with sales up 11.4% in constant currency. This performance was far better than sales growth in Walmart US of 4.5% on a like-for-like basis. An important element of the story is that as the global e-commerce businesses start to mature, Walmart’s international business is making the journey up the J-curve and reducing its losses.
The online business is strong in the US as well, with e-commerce sales up 28% in the quarter. The group is clearly finding success in omnichannel retail in numerous important markets. If anything, this is where the biggest competitive impact will be felt in our market, as Walmart will bring its global lessons to South Africa.
With the launch of a new mobile app promising delivery of grocery items within 60 minutes to customers within a 5km radius of a Walmart store, Walmart has sent a clear message that even Checkers is in its crosshairs.
Given the need to build out a national Walmart store network to really capitalise on this app, it’s even harder to believe that Game stores will continue to exist. The Walmart logo is likely to become a common sight in our malls. As always, consumers are the real winners of increased competition.
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