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the Walmart effect
$423 000 000 the value of Walmart’s corporate social investment from
February 2008 to January 2009
500 000 the number of jobs Walmart
wants to create globally in five years, starting in 2010
the percentage of countries in which
Walmart operates where it has union relationships
50%
Since declaring its interest in acquiring a 51% equity
stake in Massmart, US-based retailer Walmart has
been the subject of public scrutiny and media interest.
Interested third parties have offered opinion about
the impact that the retailer may have in South Africa.
Opinion has often been divided and has frequently
focused on emphasising negative perceptions of the
retailer’s practices. There are, however, always two
sides to every story. This publication focuses boldly on
sharing publicly available information about positive
impacts associated with the world’s largest retailer.
02 Walmart global snapshot
03 Walmart job creator
04 Walmart local supply partner
05 Walmart consumer champion
06 Walmart supply chain transparency advocate
07 Walmart best practice innovator
08 Walmart caring philanthropist
09 Opinions
Contents
01
1. Walmart global snapshot
USA: Wal-Mart Supercenters, Discount Stores, Neighborhood Markets, Sam’s Club
UK: Asda Supercentre, Asda Superstore, Asda Living, Asda Supermarket Nicaragua: Palí, La Unión
Mexico: Supercenter, Bodega Aurerra Express, Sam’s Club, Bodega Aurrera, Suburbia, Mi Bodega Aurrera, VIPS Restaurants
Japan: Compact Hypermarket, Seiyu GM, Seiyu GMS, Seiyu, Wakana
India: Best Price
Guatemala: Paíz, Híper Paíz, Despensa Familiar, Club Co., Maxi Bodega
El Salvador: Híper Paiz, Despensa Familiar, La Despensa de Don Juan
Costa Rica: Maxi Bodega, Mas X Menos, Hiper Más, Palí
China: Trust-Mart Hypermarket, Supercenter, Sam’s Club, Neighborhood Market, Smart Choice
Chile: Lider Hiper, Lider Express, Acuenta, Econo, Revive, El Buen Corte
Canada: Supercentres, Wal-Mart
Brazil: Supercenter, Sam’s Club, Todo Dia; Bompreco HyperMarket, SuperMarket, Magazine, Sonae Mercadorama, BIG, Maxxi Atacado, Nacional
Argentina: Supercenter, Changomas, Changomas Express, Mi Changomas
Honduras: Paíz, Híper Paíz, Despensa Familiar, Maxi Bodega
What are Walmart’s retail brands?
Walmart operates under many different banners around the world.
In the United States Walmart operates more than 4 300 facilities including Walmart Supercenters, Discount Stores, Neighborhood Markets and Sam’s Club warehouses. Internationally Walmart operates more than 4 000 stores in 15 markets including Mexico, Puerto Rico, Canada, Argentina, Brazil, Costa Rica, El Salvador, China, Japan, Guatemala, Honduras, Nicaragua, Chile and the United Kingdom. Together with partner, Bharti Enterprises, Walmart is establishing wholesale cash and carry and back-end supply chain management operations in India. Walmart International is the fastest-growing part of Walmart’s overall operations.
How many stores does Walmart operate globally?
(As of 30 June 2010)
USA 4 300 stores
UK 377 stores
Nicaragua 55 stores
Mexico 1 529 stores
Japan 414 stores
India 2 stores
Guatemala 169 stores
El Salvador 77 stores
Costa Rica 171 stores
China 291 stores
Chile 257 stores
Canada 319 stores
Brazil 445 stores
Argentina 46 stores
Honduras 53 stores
02 03
Worldwide employment
Walmart is one of the fastest-growing employ-ers in the world and the company continues to create more jobs for people in its operations. Last year, Walmart announced it would create 500 000 jobs around the world in the next five years. The retailer creates thousands of jobs every year, for example in 2009 more than 10 000 new positions were created by Walmart Brazil. The same year more than 7 000 jobs were created in the United Kingdom, 1 600 new jobs in Argentina and more than 15 000 temporary positions were created to support Christmas trading in Mexico.
Around half of its workforce is unionised
Walmart employs over two million associates worldwide and the company has union relation-ships in around half of the countries in which it operates. Walmart Chile has 50% union membership and Walmart China has 70%.
Walmart recognised as a good employer
One indicator that people want to work for Walmart was the receipt of more than 13-million job applications online and from ap-plicant kiosks in 2008. In Canada The Workplace Institute listed Walmart Canada among the nine best employers for Canadians over the age of 50 (in 2008 and 2009),
In the United Kingdom more than 90% of asso-ciates say they feel good about their future with Asda. In China more than 80% of associates said they would recommend Walmart to a friend or relative seeking employment.
Built on diversity
Walmart is focused on attracting and retaining a diverse workforce. The company recruits from colleges and universities with large multicul-tural populations and as a result has achieved high levels of associate diversity. More than 869 000 Walmart associates are women, 430 000 are mature people of 50 years-old or older and 257 000 are African Americans. Walmart’s employer diversity credentials are widespread and in 2008 the company was recognised by more than 37 external interest groups for its contribution to diversity. These include:
•��� Employer�of�the�Year�(2008),�National� Association of Governors’ Committees on People with Disabilities;
•� Top�Companies�for�Female�Executives�(2008),�National Association of Female Executives;
•� Top�Companies�for�Female�Executives� (2008), National Association of Female Executives; and
•� Best�Companies�for�Multicultural�Women�(2008), Working Mother magazine.
Career building
The company also invests meaningfully in developing the careers of its associates. Walmart provides its associates with on the job training, leadership seminars and direct access to job opportunities through its Career Prefer-ence System. Careers can be built at Walmart. Nearly 75% of the company’s store manage-ment joined Walmart as hourly associates.
2. Walmart job creatorWalmart creates jobs for people around the world. Walmart’s employment practices focus on diversity and the company has union relationships in around half of the countries in which it operates. The company has been recognised as a good employer in many countries, so its associates often regard Walmart as a good place to work.
02 03
Procuring from local suppliers
Walmart looks for opportunities to support local suppliers. In India, the Best Price Modern Whole-sale store serves a clientele of local restaurant owners, hoteliers, caterers, produce resellers, retail store owners, offices and institutions. These patrons choose from a selection of ap-proximately 6 000 food and non-food items, 90% of which is sourced locally.In Mexico, as much as 84% of Walmart’s produce is sourced from Mexican producers (as of November 2009).
Introducing producers to the supply chain
In many of its operations, Walmart partners with emerging farmers and suppliers with the aim of including them into the local supply chain. In El Salvador in 2009, Walmart, helped organise a merchandising show with the programme, A Hand to Grow, to help support the develop-ment of small and medium sized manufacturers. Small local companies were able to display their products for Walmart’s buyers, resulting in the introduction of 50 products in selected stores for a 90-day trial period. After the trial period, Walmart looked for opportunities to increase the number of stores where these products could be sold.
Improving access for local suppliers
For potential suppliers who might benefit from greater support and developmental assistance, Walmart runs initiatives around the world.
In 2008, Walmart China announced that it would engage one million farmers in a direct farm programme within three years. The goal is to establish farmer cooperatives that Walmart can purchase produce from, removing the
middleman and bringing higher returns to farmers and lower retail prices to customers. By working directly with the farmers in China, Walmart is able to transfer knowledge on sustainable growing techniques and food safety to growers. As a result, the quality and freshness of both conventionally farmed and organic produce has improved. By the end of 2009, Walmart built 28 direct farm platforms with 280 000 participating farmers.
In India, Bharti Walmart launched a Direct Farm Programme in 2009 and the joint venture part-nership is working with 100 farmers modernise to their farming techniques, including safer use of pesticides and fertilisers, These farmers also enjoy access to the marketplace to sell their crops.
In Guatemala, Walmart is helping small local farmers improve their agricultural capacity through its Tierra Fértil programme and the Inclusive Market Alliance for Rural Entrepreneurs (IMARE,) a three-year partnership with Mercy Corps and USAID. By offering funds, technical support and market information, Walmart helps the farmers grow high quality, competitively-priced produce that is being sold at Walmart stores or other retailers in the marketplace.
Opening export markets
Walmart is also able to provide access to its international retail network by opening export markets to local suppliers. Walmart Brazil pro-vides opportunities for local industry to export their products all over the world. Candies, corned beef, chocolate, crackers, towels, bedclothes, shoes, coloured pencils, pet toys and furniture are some of the top items that Walmart Brazil exports to the United States, Canada, Mexico, Puerto Rico, Argentina, England, El Salvador, Costa Rica and Guatemala.
3. Walmart local supply partner Walmart’s stores in the United States buy from more than 61 000 suppliers in more than 55 countries around the world. The company also, however, aims to meet local needs by creating and supporting partnerships with local suppliers and farmers.
04
Saving consumers money
A good example of Walmart’s impact on pricing is the Asda Price Guarantee in the UK. The price checker is powered by an independent website that compares like-for-like branded or own label groceries. If it turns out shoppers could have purchased a basket of eight or more comparable products cheaper elsewhere, Asda refunds cus-tomers the difference. In fact, Asda has offered a 10% Cheaper Guarantee, which says that com-parable grocery shopping will be 10% cheaper at Asda than at Tesco, Sainsbury’s, Morrisons and Waitrose or it will give customers the difference.
In the US, a 2008 study commissioned in New England about the effect of Walmart Super-centers on grocery prices and the competitive effects on prices at conventional supermarkets found that Supercenters provide products at significantly lower prices. In fact, prices on national brand groceries decrease 6% to 7% at competitors’ supermarkets within a 5-mile (8km) radius. Annually, families living within 8km of a Supercenter who shop at the store will save an estimated $186 to $298 (R1 339 to R2 145) per person.
Democratising green
Walmart isn’t only about every day low prices. The company also says its customers shouldn’t have to choose between a sustainable product and a product they can afford.
In�2009�The�New�York�Times�discussed�the� legacy of Walmart CEO, Lee Scott, saying that for decades many consumers felt that going green
was a luxury that was reserved for those with enough money and time to buy groceries at natural food stores and organic clothing from specialty retailers. By comparison, today Walmart is working with suppliers to make the most energy intensive products in its stores including personal computers, video game consoles, air conditioners and televisions at least 25% more energy efficient by January 2011 (compared to 2008).
As of January 2010, 75% of the window air-condi-tioners�sold�in�Walmart’s�US�stores�have�ENERGY�STAR® energy efficiency ratings and working with US television suppliers, Walmart has also helped increase the average energy efficiency of the televisions it sells by 67%.
Identifying harmful chemicals
Another of Walmart’s goals is to drive the devel-opment and sale of products that are better for consumer health and the environment. Walmart has developed a team to identify chemicals in products and encourage suppliers to explore alternatives. Walmart’s GreenWERCS assesses and screens the composition of chemical- based products.
Making healthcare affordable
In the US, Walmart is lowering prescription costs for companies and increasing the number of electronic prescriptions. By reducing waste and increasing efficiency in the health care system, the company believes people will have better access to quality, affordable healthcare.
4. Walmart consumer champion Walmart aims to save people money so they can live better and to be the greenest company on the planet. These goals are translating into tangible improvements as Walmart lowers prices, democratises environmental responsibility, investigates chemicals and lowers prescription costs.
05
Improving transparency
Walmart believes its customers want to buy products that are more efficient, longer lasting and better performing. It also believes its customers also want to know more about each product’s lifecycle so that they can be sure the items they buy are produced in a responsible way.
For example, Walmart launched Love Earth® jewellery in 2008, a completely traceable fine jewellery line that allows shoppers to trace pieces back to the mines they came from.
Taking the pursuit of transparency even further, Walmart announced the launch of a Sustainable Product Index in 2009. One key objective of the index is to bring greater transparency into all areas of the supply chain.
Learning about supplier practices
The first step in developing Walmart’s Sustain-able Product Index was to distribute a supplier sustainability assessment to all of the retailer’s suppliers. The assessment asked 100 000 global suppliers to provide responses to 15 questions that evaluate sustainability. The questions were divided into four areas:
Energy and climate•�Natural resources•�Material efficiency•�People and community. •�
Using the information from this assessment, Walmart has been identifying the suppliers who are instrumental to supply chain sustainability progress as well as those who are in need of greater support in building a more sustainable business.
Evaluating product data
The second step in developing the index has been to determine the social and environmental impacts each and every product on Walmart’s shelves might have, from raw material sourcing to safe disposal.
A consortium of universities has been collaborat-ing with suppliers, retailers, NGOs and govern-ment officials. This consortium is responsible for building and maintaining a global database of information on the lifecycle of Walmart’s prod-ucts. This data will ultimately act as the backbone for the development of a consumer-facing index tool for shoppers in Walmart’s stores.
Improving consumer labelling
Once all the data is compiled, Walmart aims to share it with consumers in a simple and easy to use format. The information from the database will be used to label products according to a consumer-friendly rating, allowing shoppers to compare the sustainability of similar products. (How that information is delivered to consumers is still undetermined, but could take the form of a numeric score, colour code or some other type of label.) This will make product information consid-erably more transparent, enabling consumers to access information so they can make choices and consume goods in a more sustainable way.
The index was not, however, Walmart’s first big step in vastly improving transparency. As of the end of January 2009, in aggregate, 49% of the total weight of fresh or frozen seafood sold at Walmart stores in the United States already had a Marine Stewardship Council (MSC) or Aquacul-ture Certification Council (ACC) label. This means Walmart’s customers have been able to easily identify and select products that come from sustainable fisheries.
5. Walmart supply chain transparency advocate
06 07
6. Walmart best practice innovator
06 07
Using less packaging
Packaging is at the nexus of every global supply chain and customer relationship. This is because for nearly every product sold in stores, there is both primary and secondary packaging. Small changes to packaging can have significant impacts on the use of materi-als, manufacturing, shipping containers, trucks, storage, refrigeration, waste and energy used for production. This is why Walmart established its Packaging Network with the aim to reduce the amount of packaging in the company’s supply chain by 5% by 2013. Conservative annual estimates of the changes Walmart can make by 2013 based upon a 5% packaging reduction in its supply chain are (in the United States only):
667 000 metric tons of CO•� 2 not emitted into the atmosphere 213 000 trucks off the road annually •�66.7-million gallons (252-million litres) •�of diesel fuel saved.
Making headway each year
In 2005, Walmart’s packaging team partnered with select private label brand suppliers to improve the packaging on nearly 300 items in its Kid Connection toy line. By making the packaging a little smaller on this one toy line, Walmart used 497 fewer shipping containers and generated freight savings of more than $2.4-million (R17.8-million) per year.
Since 2006, Walmart’s United States Packag-ing Network has hosted an annual Sustainable Packaging Expo in Bentonville, Arkansas.
Here, approximately 2 000 product suppliers meet with 130 packaging suppliers to investi-gate sustainable packaging options.
In 2008, Walmart Brazil created a project called End-to-End, which analyses the lifecycle of products and allows Walmart to work with suppliers to develop more sustainable prod-ucts. In 2009, this project resulted in 10 new or redesigned products that reduced packaging materials or utilised recycled materials for the packaging.
Sustainable packaging scorecard
In addition to Walmart’s annual sustainable packaging expo, the company has also devel-oped an online packaging scorecard to gather information on suppliers’ product packaging.
The scorecard allows suppliers to measure how their product packaging helps reduce energy, eliminate waste and sell more sustainable products. It evaluates many environmental attributes of packaging including greenhouse gas reductions, substrate material choices and chemical composition.
The scorecard database currently contains information for more than 329 000 items car-ried in Walmart stores and 11 000 items carried in Sam’s Club. It has already been rolled out to suppliers in Canada and Mexico, where they are in the process of adding their product packaging information into the system. Wal-mart expects that by the end of 2011, buyers in Canada and Mexico will be able to use the information to influence purchasing decisions.
Walmart’s ultimate aim is to be packaging neutral globally by 2025.
Walmart has many company-wide goals. Included in these are the goals to create zero waste and to sell environmentally friendly products. Walmart has identified packaging reduction as a key opportunity for making headway in these areas and the company is working with its suppliers to develop sustainable solutions around the globe.
Ongoing investment in US education
In 2009, Walmart and its Foundation gave more than $53-million (R381.6-million) to fund educational programmes in communities across the United States. Through its scholarship programmes, the Walmart Foundation recently awarded more than $9-million (R64.8-million) in academic scholarships to help students afford higher education in 2010/2011. The com-pany also recognises the important role teach-ers play and its Teacher Rewards Programme paid out more than $4-million (R28.8-million) to 40 000 teachers for the current school year.
Billions spent fighting hunger
In May 2010, the Walmart Foundation an-nounced a $2-billion (R14.4-billion) cash and in-kind commitment to fighting hunger in the US. Through the end of 2015, Walmart will donate more than 1.1-billion pounds (2.4-billion kg) of food valued at $1.75-billion (R12.6-billion) and give $250-million (R1.8-billion) in grants to support hunger relief.
The company is also mobilising its associates and customers by, for example, having its logistics team lend their expertise to help food banks become more efficient in their operations.
Mobilising fast disaster relief
When disasters reach the point where relief efforts exceed the local level of response, Walmart is able to provide quick assistance. Working with the American Red Cross and Salvation Army, Walmart and its Foundation are able to provide life-sustaining items to those in need in the US. Around the world, the company has committed million of dollars for disaster relief efforts in earthquake-torn regions, such as Chile and Haiti. During the Sichuan earthquakes in China, Walmart committed funds to rebuild schools, repair countryside clinics and purchase ambulances.
International aid
Walmart also invests in ongoing aid programmes to address food insecurity and support skills development.
Walmart Argentina provides food and funding to 29 soup kitchens. Walmart India launched a training centre in Punjab, offering students scholarships and world-class skills training in retail and cash-and-carry operations. Walmart Mexico, meanwhile, established 1 634 vegeta-ble gardens and family farms that supply food and income to more than 3 230 people in Oaxaca.
7. Walmart caring philanthropistIn 2008 Forbes magazine recognised Walmart as the “Most generous company overall”. Through its philanthropic programmess and partnerships, the Walmart Foundation funds initiatives in education, workforce development, economic opportunity, environmental sustainability and health and wellness. From 1 February 2008 to 31 January 2009, Walmart and its domestic and international foundations gave more than $423-million (R3,05-billion) in cash and in-kind gifts globally.
08
This would be our first retailing operation
in Africa, and the people of South Africa
understandably have questions: What is
Walmart? And why do we wish to come
to Africa?
Walmart is a retailer, founded by Sam
Walton, that began in a small town near
the middle of the US in 1962. We desire
to have stores in Africa because we’re
convinced that Walmart’s core mission –
to save people money so they can live
better – is a compelling fit with Africa’s
growing economic vitality. Nowhere is
that vitality more apparent than in SA.
Surveys show that a majority of South
Africans aren’t familiar with the name
Walmart. That’s not surprising. Our inter-
national expansion over the years has in-
cluded the acquisition of local retail chains,
and we typically retain the brand names
of the chains we acquire, as we plan to
do with Massmart’s stores. As a result,
we operate under 55 different local ban-
ners in 15 countries around the world.
While every acquisition and every local
market is unique, our experience of enter-
ing and growing these markets shares
important characteristics that will be part
of our presence in SA. We pioneered the
concept of “everyday low prices” in the US.
The concept is simple: rather than moving
prices up and down with periodic price
promotions, we charge consistently low
prices all the time. By offering everyday
low prices in SA, we hope to increase the
purchasing power of the rapidly growing
middle class and disadvantaged families.
We plan to open new stores in SA and the
region, in communities where consumers
have been traditionally underserved.
In addition to growth in new stores, we
look forward to growth in the food choices
we can offer, especially in fresh produce.
We expect that jobs will be created in SA
to accommodate this.
Consistent with our emphasis on being a
local company, we will rely on Massmart’s
management team. As we expand and
recruit new associates for management
and other jobs, we will recruit local people
and provide training and opportunities for
career growth. We have done this success-
fully in all markets in which we operate.
Around the world, our stores typically
source a majority of products locally. In
China, Brazil, India and Mexico, more than
90% of their food and merchandise comes
from local suppliers. I expect that in SA we
will have similar sourcing strategies. We are
passionate about the opportunity to work
with smaller local farmers to help them
become Walmart suppliers, for our local
stores as well as for global export. We’ve
had a growing sourcing operation in SA
for five years. Our sourcing office in Stellen-
bosch purchases about 25% of the South
African citrus shipped to the US.
We also look forward to working with the
labour unions representing Massmart as
we grow. Half of our national operations
around the world have some level of union
representation. Our focus in these rela-
tionships is on doing what is best for our
customers and employees.
We have become a company with a strong
local focus in our operations, sourcing, hir-
ing and community involvement. Walmart
is known globally for growth in jobs and
stores. We are a company that enjoys
strong relationships with communities,
governments and consumers.
Our emphasis on localisation extends to
becoming a contributing partner in each
country, economically and socially. In SA,
that will mean our active participation in
supporting black economic empowerment.
Massmart has distinguished itself among
retailers in this social programme, having
achieved level-three contributor status.
We will build on that.
We work hard at being a responsible
citizen�of�the�world.�You�c
an�see�that�
in our efforts to forge and promote
sustainability – within Walmart and
among our suppliers and in our
support for social action projects.
Being a responsible global citizen
begins with being a responsible
local citizen. Walmart looks
forward to earning our credentials
as a responsible and productive
citizen of South Africa.
- McMillon is CEO of
Walmart International
DOUG McMILLON: Why Is WaLMart
kNOCkING ON sa’s DOOr?
Walmart is working with South Africa’s Competition Commission on our plan to acquire a 51% interest
in Massmart, the South African-based holding company better known by its retail store brand names
— Game, Makro, Cambridge and Builders Warehouse.
Published: 2011/01/26, Business Day
09
IF�ANYONE�still�questions�whether�Africa�really is the next big investment player,
at least one seriously big hitter, the world’s largest retailer, has no such
doubts. Walmart’s $2,3bn offer for 51% of SA-based Massmart is the Arkansas- based company’s second biggest
investment in more than a decade. In that time, Walmart has grown its
non-US revenue from virtually zero to a quarter of its annual $400bn turnover.The significance of this investment –
and let’s not forget Walmart was pre-pared to stump up double the amount for all of Massmart – has not been
lost on audiences in SA or elsewhere. Recently, for instance, the Daily Record
newspaper reported that farmers in far-off Uganda were likely to benefit
from the deal. It predicted Walmart would “extend its experience in con-
necting farmers with the supermarket’s global supply chain, boosting farmer
incomes, and helping them to improve the quality of their produce”.
Quite how and when all of this will come to pass is not entirely clear: Massmart
has just one outlet in Uganda – a Game shop in Kampala – and even in Mass-
mart’s home market no one seriously expects that the Walmart acquisition
will result in an overnight explosion of new stores. (Massmart has, of course,
put on record its plan to add another 150 to 160 stores in SA and Africa, a more-than-50% increase, which, it has
indicated, will take several years to roll out.)
All indications so far are that Walmart is in no particular hurry to suddenly throw
up what the Americans call “super cen-tres” across the length and breadth of
Africa (Andy Bond, the executive respon-sible for Walmart’s acquisition, has said he is more than happy that Massmart is
appropriately aggressive about expan-sion.) What is quite clear, however, is that Walmart has bought into
the growing belief that Africa is undergoing economic and social
change for the better.By putting $2,3bn where its mouth is,
Walmart has signalled a massive vote of confidence in the future of SA and of the
rest of the continent, a belief in Africa’s future that is, regrettably, not that com-
mon in our own country.The modern African economy is about much more than just resources. These
account for 24% of African gross domes-tic product, while the so-called consum-
er-facing sectors, of which retail is an important component, represent 30%-
40% of the continental economy. Africa has a combined population of 1-billion
and it is not inconceivable that within the space of a generation its number
of consumers could surpass China’s.Greater political stability and more
equitable, rational economic policies, combined with rapid urbanisation,
will see the number of Africans living middle-class lives rising from 35% now
to more than half in only a decade.For these urban consumers, the kind
of modern retail experience a Massmart can offer them comes as manna from heaven. They are used to small neigh-
bourhood corner shops and general-dealer type stores. The big, spacious,
modern stores that Massmart and SA’s other retailers bring to their cities chime
precisely with the kind of lifestyles these people always envisaged for themselves
and their families.
In the wake of the Walmart/Massmart announcement, Bloomberg tracked
down one of this new type of shopper, Richard Twesigye, a 61-year-old busi-
nessman who does his shopping at the Kampala Game precisely because
it gives him such a retail experience.“Some things may appear expensive
MassMart Offer - It’s WIN-WIN as WaLMart pUts Its MONey Where Its MOUth Is
Walmart may have extensive emerging-market experience, even its logistics
experts will be able to learn a trick or two from Massmart.
Published: 2011/01/17, Business Day
10
but considering their superior quality, prices remain good,” Twesigye told a
Bloomberg correspondent. “At such a big store, one can avoid the hazards
of human jam, which tends to come with pickpockets.” Just as appealing
to shoppers such as Twesigye is the previously unimagined variety of
merchandise available.And, of course, the prices. This is where the Walmart clout is going
to have a major effect. The US dis-counter’s experience in sourcing stock
at the lowest possible prices is legend-ary and it bears mentioning that this
experience is not restricted to the US market. In the past decade, Walmart
has learnt a great deal about operat-ing in emerging markets where, as
Bond said recently, they understand the challenges of satisfying a market
that has small homes, small refrigera-tors and few cars.
Walmart’s purchasing clout will help Massmart source electronics and
homeware at prices that will appeal to Twesigye and millions of shoppers
like him. In SA, one can expect the old debate about Walmart’s effect on
small local business to resurface, but what is undeniable is that the Ameri-
cans’ entry will mean lower prices for consumers – particularly those of the
lower living standard measures.With Massmart moving more into fresh produce, the competition, in the
words of Pick n Pay founder Raymond Ackerman, will really have to pull up their socks.
Also, in time – as the Daily Record predicts, small local farmers in Uganda,
SA and elsewhere (at least those who are able to meet the strictures of a
very demanding buyer) will find new and growing markets for their fresh
produce. For Walmart/Massmart it is politically and commercially important
that they are seen to be encouraging local producers but, as the business
expands its footprint on the continent, it will inevitably become increasingly
integrated with the local economies in which it operates. One Walmart
operation with which I am particularly familiar is that of Asda in the UK –
an operation Bond headed up until recently. There is simply no comparing
Asda before and after Walmart. Today’s Asdas are spotless, spacious, the staff are on their toes, the quality is very
good and the prices exceptional. Most significantly for Massmart, the
Asda demographic is one that will help Walmart quickly come to grips with
the emerging consumer in Africa.
In the typical Asda store today, only about 10% of total floor space is
devoted to storage. That’s a testimony to the sophistication of its just-in-time
logistics operations. In SA, the per-centage of space given over to stock
is more like 40%-50%, but that has a lot to do with the much larger dis-
tances delivery trucks have to cover in SA. In the rest of Africa, the challenges
and the cost of getting goods into stores are of a much greater magni-
tude than in SA (although these costs are compensated for, to some extent, by higher margins) and, while
Walmart may have extensive emerg-ing-market experience, even its
logistics experts will be able to learn a trick or two from Massmart. CEO
Grant Pattison and his team are very good at logistics; in the discounting
game they have to be good at driv-ing costs out of the supply chain if
they are to remain competitive.The Walmart/Massmart deal, one has to conclude, is a partnership, if not
of equals, then at least of strength.- Gilmour is an investment analyst at Absa
MassMart Offer - It’s WIN-WIN as WaLMart pUts Its MONey Where Its MOUth Is
Walmart may have extensive emerging-market experience, even its logistics
experts will be able to learn a trick or two from Massmart.
Published: 2011/01/17, Business Day
11
When Walmart arrived in
Mexico in 1991 as a result of
a joint venture with Cifra, then
Mexico’s largest local retailer,
many expressed concern.
At the time I was a manager in
Cifra’s merchandising depart-
ment. What I did not anticipate
was the positive transforma-
tion that Walmart would bring
to the local retail market.
Right from the start, we could
see that Walmart embraced
our local culture. It became
clear to me that Walmart had
come to my country not to
change us, but to help us
grow and become even more
successful. Walmart invested
significantly to help us expand,
particularly into underserved
rural markets. Just in the last
decade, we have added 1 000
new stores – 267 of those
last year.
Most of these stores are
smaller formats that cater to
middle- and low-income fami-
lies. Each of these stores offers
our customers a broad assort-
ment of high-quality products
at consistently low prices.
Walmart pushed us to become
even more local by encourag-
ing us to partner with local
farmers and suppliers. Today,
Walmart de Mexico sources
94% of its products locally,
from 17 000 local suppliers.
Many of our local suppliers
have become part of Walmart’s
global supply chain and have
found a significant market
for their products all over
the world.
Walmart has encouraged
us to work productively
with our local labour unions.
We continue to maintain
healthy and positive relation-
ships with our unions, which
today represent 18% of our
total workforce. In addition,
our employees have benefited
greatly from Walmart’s invest-
ment in training and develop-
ment programmes. In 2010,
we invested more than eight
million man hours into train-
ing. Rather than importing
managers and executives from
abroad, Walmart has prior-
itised local talent and offered
education to encourage career
development.
My personal career journey
is a perfect example of the
opportunities Walmart creates.
I started on the shop floor and
now serve as CEO of the Latin
America region. A large per-
centage of our executive team,
in Mexico and globally, also
came from the shop floor.
Perhaps the greatest benefit
of our partnership is the good
work we’ve done for our
people and our country.
In 2003, we formed the
Walmart de Mexico Founda-
tion, which has benefited and
improved the quality of life
for hundreds of thousands
of Mexican families.
Walmart has also challenged
us to set aggressive sustain-
ability goals. We have set an
objective of 100% of our units
operating with renewable en-
ergy by 2025, and we recently
established a major wind
farm that supplies electricity
to 348 of our stores in Mexico
and Central America. About
10 years after Walmart’s initial
investment in our company,
we decided to change our
company’s name from Cifra to
Walmart de Mexico. This was a
personal choice for us, and it
reflects the positive experi-
ence that we have had within
the Walmart family.
The relationship my company
built with Walmart illustrates
the emphasis Walmart places
on local culture and the care
it takes to serve the local
community. I have every con-
fidence that Walmart will be
an ideal partner for Massmart
and will continue its tradition
of bringing meaningful value
to customers, employees and
consumers across South Africa.
– Solorzano is the chief executive
for Walmart Latin America
WaLMart’s WINNING Ways
Right from the start, Walmart embraced our Mexican
culture, writes Eduardo Solorzano
Published: 2011/01/30, City Press
Published by Shop Talk on behalf of Massmart for the Gordon Institute of Business Science
15 February 2011 conference, Johannesburg.