Warning about Walmart prices in South Africa
Former Shoprite chief executive, Whitey Basson, warned that it would be difficult for Walmart to beat Checkers and Pick n Pay’s prices.
Walmart, the world’s largest brick-and-mortar retailer, will open its first branded stores in South Africa later this year with an aggressive pricing strategy.
Kath McLay, Walmart International President and CEO, said their South African stores will offer a wide range of merchandise.
The products will include fresh groceries, household essentials, apparel and technology. It will offer a variety of locally sourced products.
“By partnering with South African suppliers and entrepreneurs, Walmart will bring its signature Every Day Low Prices and global standards to the market,” McLay said.
The new Walmart stores promise affordable groceries and a selection of family, home and entertainment items.
“With sites already in development, these new stores are set to open before the end of the year, with official opening dates to be announced in October,” McLay said.
“Every rand matters when it comes to price. This balance of quality and everyday low prices enables us to build customer trust,” said Massmart CEO Miles Van Rensburg.
When Walmart enters a new country, it focuses on low prices, supply chain mastery, and local adaptation to gain market share.
A cornerstone of this strategy is Walmart’s Every Day Low Price (EDLP) philosophy, which aims to attract cost-conscious consumers.
“At Walmart, our Every Day Low Prices mean you can count on low prices today, tomorrow, next week, and the week after that,” it said.
“As we open stores later this year in South Africa, we’ll bring that same price discipline to the market.”
“In a country where food security is a challenge for so many, we give customers an opportunity to take charge of their food choices,” it said.
Whitey Basson’s comments about Walmart’s launch in South Africa
Although Walmart did not explicitly promise to offer lower prices than its competitors, like Pick ‘n Pay and Checkers, many people expect this.
Walmart said it was working to keep prices low so customers could save money when shopping with them.
Simply put, Walmart indicated that its store’s basket of products would be lower than that of its competitors.
Former Shoprite CEO and retail expert, Whitey Basson, told Netwerk24 it will not be easy for Walmart to undercut large retailers like Checkers and Pick n Pay.
He explained that you need high volumes to reduce prices. As a new entrant, Walmart will not have the same volumes as the large retailers.
Basson said it is good for the South African retail market to get new blood in the form of Walmart’s imminent launch.
“It is great for the young professionals at Shoprite to face real competition from Walmart, especially as Pick n Pay was struggling,” he said.
“Walmart will implement the best practices of the retail sector in South Africa. This is good for the sector,” he said.
However, Basson cautioned against people expecting Walmart to offer better prices than the existing players.
“Between Shoprite, Pick n Pay, and Food Lover’s Market, the price of food is very low compared to international standards,” he said.
“Our profit margins are half what I have seen in Europe and the United States. This should not be the case.”
Basson added that it would not be easy for Walmart to take on established food retailers in South Africa.
“The young professionals at Shoprite are skilled and hardworking, and are using technology to their benefit,” he said.
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