Shoprite and Massmart are the frontrunners in SA's retail scramble for Africa, but others are also positioning themselves for expansion on the continent.



Massmart is in 12 African countries and earlier this year US retail giant Walmart bought 51% of Massmart, specifically to secure a position in Africa.

Massmart's discount store, Game, and its wholesale arm CBW operate outside SA, and a Builders Warehouse store is scheduled to open in Gaborone, Botswana, next month.

Global consulting firm McKinsey & Co says the number of households in Africa with discretionary income is expected to increase by 50% over the next 10 years to 128million households.

There are 67 large cities in Africa, each with a population of more than a million people. But many of these markets are under-serviced.

Shoprite and Massmart release full-year results this week and the market will be watching for signs of growing rivalry between the two as Massmart extends further into Shoprite's traditional turf in the low-income market.

Massmart has prioritised expansion at this level, especially in fresh foods, as well as expansion into Africa.

Both have had to contend with a strong rand and economies that are recovering from the recession in their African operations.

Shoprite's sales update released last month disappointed analysts. It said turnover would grow 7.3% to R72.3-billion in the 52 weeks to end-June.

The market will be looking for clues to see how CEO Whitey Basson and his team plan to take on Cambridge Foods, Massmart's low-income retail offering.

Massmart said in a trading update last month that sales for the year to June rose 11.7% to R53-billion, with the biggest increases at Massbuild and Makro. This occurred as prices fell 1.3% over the period.

Nedcor Securities retail analyst Syd Vianello expects a 35% to 40% reduction in dividend payout from Massmart in order to finance the roll-out into Africa - if not this results period, then the next. Massmart also needs to align its dividend policy with Walmart Stores.

Meanwhile other SA retailers are clamouring to increase their exposure to Africa. Pepkor, SA's largest clothing retailer by branches, is to open stores in Nigeria.

This week Pepkor chairman Christo Wiese told Bloomberg the group would invest about R100-million in the first phase of operations. Pepkor plans about 50 outlets in Nigeria and will open its first Nigerian store this year.

Wiese, who is also chairman of Shoprite, says: "There are huge opportunities as well as constraints."

Shoprite's expansion plans have been kept in check because of difficulty in obtaining good store locations on the continent.

Woolworths is in eight countries in Africa outside SA and will be opening its first store in Nigeria within six months.

Woolworths CEO Ian Moir says the group will add 16 stores to its portfolio in Africa this financial year, which would take the total number of stores in Africa to 60. About 95% of the products in Woolworths' stores in Africa is clothing.

Clothing retailer Mr Price is also growing its African footprint into Nigeria, Angola and Ghana.


http://www.businesslive.co.za/africa/africa_markets/2011/08/20/retailers-ready-to-jump-into-africa

With Zara and Topshop entering into SA,it is no surprise that the South African retailers are eyeing the continent.