Blog: Wal-Mart talks up Africa's potential at Davos
Dean Best | 26 January 2012
With the Swiss mountains behind him, Doug McMillon, chief executive of Wal-Mart's international operations, discussed the retail giant's new business in Africa in an interview with CNN.
McMillon said Africa, which Wal-Mart entered last year when it acquired a majority stake in South African retailer Massmart, was a "very attractive" market in the mid-to long term.
Wal-Mart's 51% stake in Massmart gives it access to a growing business in South Africa but also one that operates in 12 countries outside its domestic market.
"South Africa as a country presents a great opportunity. That's where 92-93% of the total revenue is. Beyond that, into the region, we're thinking about it a city at a time because that's where the population centres there. There's enough business there to support a few stores so we can learn the market."
Wal-Mart's entry into Africa and investment in Massmart was not an easy ride. It had wanted to acquire 100% of Massmart but scaled back its bid after talks with investors in the South African firm.
The US retail giant's eventual investment proved controversial with unions and some South African politicians concerned about the impact on local business. Wal-Mart and Massmart had to set up a development fund to help suppliers.
McMillon told CNN Wal-Mart had worked with South African suppliers, which would help both itself and local businesses. "Around the world, we buy the vast majority of our merchandise locally. It helps ensure we get shorter lead times and helps ensure we have products that are relevant for customers. It helps create jobs and if we have customers who have jobs, the stores can grow."
The Wal-Mart executive was coy about where the world's largest retailer was looking next. "We're looking for large markets with a high growth rate. We wouldn't comment on future entry or acquisitions because the prices would go up so we have to be careful with what we say about it."
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