The largest retailer of goods in the world, Walmart, has shown interest to enter oil-rich markets such as Nigeria and Angola.
The retailer, which is very similar to South Africa’s Shoprite has shown keen concentration in the African market and has a target of opening up at least 90 stores in Sub-Saharan Africa over the next three years.
The retailer has almost exhausted the North American market and has chosen to set camp in Africa to continue its expansion. This follows Walmart’s $2.4 billion acquisition of MassMart, a major big box retailer in South Africa.
The world’s largest retailer has enjoyed past success entering emerging markets such as China but failed in other markets, such as Germany.
Some of the failed expansions were attributed to misinterpretation of local cultures, for instance, for the German market the retailer used the wrong technique. They enforced policies that cashiers should smile at customers, but customers misinterpreted this as flirting. And when the company placed greeters at the front entrances, a common practice in the U.S., German customers felt harassed; as a result Walmart sold off its German assets at a $billion loss in 2006.
The technique they will be using for the African market is not known, however it will likely be different from the strategy used in the US which is attracting the lowest cost retailer. It is most likely that they will target Africa’s emerging middle and upper classes as it stands a good chance of finding success as it will be one of the first true big box retailers in the region. Walmart has already found similar success with this strategy in China, Mexico, and elsewhere.
The International Monetary Fund predicts that by 2018 the world’s fastest-growing markets and economies will be found in Africa. Past predictions in regards to Africa, however, have fallen short, so many investors remain wary.
Either way, Walmart has the money, capacity, and reputation necessary to invest for the long haul, the report said. If Africa’s economy continues to grow, and Walmart is able to avoid cultural missteps of the past, the company could position itself as one of Africa’s leading retailers in years to come.