Wal-Mart goes to Africa

The big-box behemoth is making moves in African retail

by Emma Teitel

Globalization can be a risky business. Starbucks was forced to close its Israeli branches in 2003 because Israelis preferred their own coffee chains, and Kellogg’s expansion into India failed miserably, possibly because Indians don’t eat cold cereal for breakfast. Fortunately for Wal-Mart, though, everyone likes cheap retail. The big box chain that swept through North America, Europe and Asia with its relentless price slashing will soon move into Africa (the “final frontier,” as some marketers call it), having recently bought out the continent’s current megastore—Massmart—for US$2.4 billion.

Foreign investment is no stranger in Africa, but until now the continent’s unpredictable property prices and transport routes, and its isolated neighbourhoods of affluent consumers, have kept offshore retailers away. Wal-Mart plans to beat these challenges using Massmart’s model and experience, though many Africans wish they wouldn’t. Labour unions are afraid the corporation will cut jobs and lower wages. Others view the expansion optimistically, as a much-needed test case for wider foreign investment in African countries. Still, the question remains: even if cheap goods and services benefit the consumer population, will the Wal-Mart way really suit a largely developing continent?




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