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Walmart Aims to Overcome Challenges and Succeed in African Market

Walmart has reportedly renewed its commitment to Africa by increasing its online efforts at South African retailer Massmart.

Walmart initially acquired a controlling stake in Massmart over a decade ago, to capitalize on Africa’s rapidly growing consumer market, The Wall Street Journal (WSJ) reported Monday (Sept. 11). However, various challenges, including a commodities crash in 2014, pandemic restrictions and geopolitical tensions, hindered Walmart’s success in the region.

To overcome these obstacles, Walmart doubled down on its investment in Massmart last year, buying the remaining 47% of the retailer for 6.4 billion South African rand (about $358 million), according to the report. The acquisition granted Walmart greater control over Massmart and enabled the company to be more aggressive in driving change.

Walmart’s decision to focus on Africa follows a series of disappointing ventures in international markets, the report said. The company faced losses after exiting the Japanese market and selling its stake in a U.K. grocery store chain. However, Walmart has a proven track record in developing markets with a growing middle class, such as Mexico, Latin America, India and China.

Africa presents unique challenges for Walmart, including the relatively high cost of mobile data and the lack of basic infrastructure for last-mile delivery, per the report. Additionally, the South African retail market is highly competitive, with numerous established players.

To address these challenges, Walmart has injected money into Massmart and appointed its own executives to key roles, according to the report. The retailer has increased its number of tech specialists from 28 in 2021 to nearly 300, focusing on software development, product operations and analytics.

Walmart has also implemented its proprietary software, which optimizes the picking, packing, staging and distribution of online orders at Massmart’s Makro chain of wholesale stores, the report said. This integration of technology aims to enhance efficiency and improve the customer experience.

Kieran Shanahan, chief operating officer at Walmart U.S., who was formerly regional CEO at Walmart International, told the WSJ: “The challenges [in Africa], I think we can overcome.”

The various Massmart subsidiaries give Walmart a footing in some of Africa’s fastest-growing markets, PYMNTS reported in October. From Uganda to Nigeria, these markets are now on the rise. And, at a time when Walmart’s home retail ecosystem is increasingly saturated, these emerging economies present an opportunity for it to gain a lead in developing markets.

Source : PYMNTS