It would seem that even its most competitive rival believes that Walmart’s expansion over Africa is quite inevitable. Shoprite´s fear appears metaphorically clear when one considers that the retail chain is dreading competition from a store that dedicates only 250 square meters to perishable food products, while it boasts 5683 square meters of food aisles in the same location.
According to Massmart´s head of corporate affairs Brian Leroni, “Shoprite’s action is one which pits them against consumer interest in that it is a measure designed to protect their market share by preventing new entrants from competing against them in the food and grocery market..it is interesting that Shoprite, the largest player in food retail, is the only retailer that has to the best of our knowledge sought to enforce exclusivity clauses to prevent Massmart from competing against them.”
In its application to the Court, Shoprite claimed that it would “lose sales and suffer financial loss if Game is permitted to trade as a general supermarket and grocery store, as well as a liquor store, at the centre”. The court ruling, which came out in late October was in favour of Shoprite.
When asked to comment on the indictment, Shoprite spokesperson Sarita von Wyk, replied that the company “is not in a position to comment on the GAME issue as the matter is subject to further legal proceedings.”
It is easy to understand why both Shoprite and Massmart are rather hermetic when it comes to making comments that refer to their competitors, as, for example, Massmart´s December 2012 Integrated Report lists the market´s “Competitive intensity” as one of the company´s major risk areas.
It is easy to understand why both Shoprite and Massmart are rather hermetic when it comes to making comments that refer to their competitors, as, for example, Massmart´s December 2012 Integrated Report lists the market´s “Competitive intensity” as one of the company´s major risk areas.
While the GAME-store court-ruling was a battle won for Shoprite, it seems that the company is well aware that no matter how many stores it may run all over the region, Massmart´s Walmart-style aggressive expansion is going to be very hard, if not impossible, to stop.
Whoever wins the war, the challenge for Shoprite, Massmart and any other grocery chains with a thirst for African expansion today is whether they can integrate and contemplate the needs of local suppliers and distributors in the context of their expansion strategies. It remains to be seen whether this fierce competition will eventually have a truly positive impact on African development.
