Measuring Wal-Mart's impact on South Africa

By Freddie Pierce
What exactly will Wal-Marts presence do to South Africas retail supply chain? A recent study tried to measure just that. According to the Supplychainfo...

What exactly will Wal-Mart’s presence do to South Africa’s retail supply chain? A recent study tried to measure just that.

According to the Supplychainforeseight research study, South Africa’s local retail sector is prepared to deal with Wal-Mart’s proven plan for success. Local retail businesses will try and compete with Wal-Mart by emphasizing communication and increasing customer service.

The local retailers are also expected to try and ‘streamline the supplier base,’ which could result in more stable, cost-effective contracts with suppliers.

“Walmart might be defined as a supply chain business that happens to be a retailer; as opposed to supermarket chains, who are retailers who happen to be in the supply chain business,” industry consultant Malcolm Leitch said.

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One problem that retailers could face is the fact that Wal-Mart could have a significant advantage with its move into South Africa. Supply Chains in the country are seen as inefficient, which Wal-Mart could completely change. In the U.S. and European market, Wal-Mart faced much more competition thanks to a solid infrastructure of stable supply chains.

Wal-Mart’s acquisition of Massmart earlier this year has sparked plenty of debate as to fair trade within South Africa, as countries as far away as Argentina opposed the deal. As the third largest distributor of consumer goods in Africa, the Wal-Mart takeover is expected to cause a pretty big rift in the South African market.

Those against it say that while consumers will likely reap short-term benefits of lower pricing thanks to Wal-Mart’s leverage with suppliers to broker better deals, the long-term effects could be disastrous to South Africa’s small businesses.

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