Massmart to Open 90 New Stores in Africa in Next 3 Years

JOHANNESBURG–Wal-Mart Stores Inc.’s ( WMT ) South African retailer Massmart Holdings Ltd. (MSM.JO) plans to open 90 new stores across sub-Saharan Africa over the next three years, as the group targets growing markets like Nigeria and Angola.

The group said the focus is on fresh food growth. It will open a stand-alone food store in West Africa as a trial by the end of the year, with hopes of expanding that to East Africa. The group is also adding more brands from Wal-Mart stores in other parts of the world to its African operations, including a clothing line from the U.K. in November.

Wal-Mart last year closed a deal worth roughly $2.4 billion to buy 51% of Massmart, a move many saw as a springboard for Wal-Mart to grow across the continent.

Over the coming three to five years, Massmart will be opening more stores in the rest of Africa, its Chief Executive Grant Pattison said Thursday.

Wal-Mart and Massmart aren’t the only groups setting their sights on Africa. Companies from the U.S., China and India have been pouring billions of dollars into the continent to tap new consumers and infrastructure deals.

Driving the interest are forecasts for strong growth. By 2018, five of the world’s fastest-growing economies will be in sub-Saharan Africa, according to the International Monetary Fund.

Last month, General Electric Co. (GE) signed an agreement to build a 400-megawatt gas-fired power plant in Tanzania. Ford Motor Co. (F) said it’s formulating a new strategy to target consumers in the rest of the continent with tailor made products. And this week Kenya said it had signed agreements worth $5 billion with China for projects including railway and energy development.

Since Wal-Mart closed the deal last year, expansion has been slow though, as it faces debt-laden consumers in its biggest African market of South Africa. Acquiring property rights for new stores in other countries has also been hard, Mr. Pattison said.

He warned that the consumer in South Africa will remain under pressure in the coming months, but stressed long term the group will become a bigger player in the continent.

Mr. Pattison also confirmed that the group has been having conversations with retailers in Kenya about a possible joint venture, but declined to provide further details. One of the retailers is Kenyan supermarket chain Naivas.

“It’s the food retail space where we would look for an acquisition,” Mr. Pattison said.


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