Shares in U.S. retail giant Walmart (WMT) edged higher today as it said it is set to open its first branded stores in South Africa by the end of this year.
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African Innovation
Walmart said the move follows its first Growth Summit held in the South African city of Johannesburg back in April. During that event suppliers from 12 countries across the African continent were featured “with incredible innovations and products made, grown, or assembled in Africa.”
The move by Walmart, which already owns South African retail group Massmart, places it in direct competition with established domestic retailers including market leader Shoprite (SRGHY), Woolworths (WOLWF) and Pick n Pay.
Online, it will be going head-to-head with e-commerce group Amazon (AMZN) and market leader Takealot.com.
“This strategic move underscores Walmart’s commitment to making high-quality, affordable merchandise accessible to more customers,” a Walmart statement said, adding that it has recruited small and medium-sized African-based suppliers.
Walmart said that its South African stores will offer a wide range of merchandise, fresh groceries, household essentials, apparel and technology products.
“Walmart will also offer a variety of locally sourced products. By partnering with South African suppliers and entrepreneurs, we aim to bring our signature every day low prices and global standards to the market while celebrating the country’s rich culture,” Walmart President and chief executive Kathryn McLay said.
Consumer Growth
The company said several store sites are under development, with official opening dates expected to be announced in October.
The company’s Massmart brand owns the Makro and Game retail chains, which sell similar merchandise to Walmart, and also owns a building materials chain Builders Warehouse.
According to 6Wresearch, the South African food and grocery retail market is estimated to grow at a compound annual growth rate (CAGR) of approximately 4.8% from 2025 to 2031. It is likely to be driven by rising disposable incomes in the country.
The demand for food and grocery products is also being boosted by more urbanisation and the growing popularity of modern shopping options such as ecommerce.
The South African move will also increase the company’s international reach with countries such as Canada and Mexico already adding to its top line – see above.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 30 Buy ratings. Its highest price target is $127. WMT stock’s consensus price target is $114.07, implying an 11.44% upside.
