Concentrating on frozen foods

Walmart to focus on frozen foods

RETAILER NEWS

Fin24 - Jun 3rd 2011, 08:16

Rogers, Arkansas - As Walmart expands its international business, the company wants to bring ideas from Massmart Holdings [JSE:MSM] to other markets, company executives said on Thursday. 

Walmart's hotly debated $2.4bn purchase of a majority interest in Massmart will put Walmart in the building supply business, one of a variety of Massmart store formats. The company expects the acquisition to close in June.

Almost all of Massmart's stores - 263 of them - are in South Africa. But JP Suarez, senior vice president of international business development, said the world's largest retailer intends to expand Massmart's footprint in southern Africa, where the chain operates in more than a dozen countries as far north as Ghana and Nigeria.

One priority is to offer more refrigerated food, a category lacking among Massmart and its competitors, Suarez said.

"It's going to be a real win for the customer. It's something Walmart has a great expertise in," said Cathy Smith, Walmart's international chief financial officer.

The Massmart acquisition give Walmart access to 50 million new customers.

The South African government's competition agency approved the deal this week.

Massmart's home building supply stores will be a new venture for Walmart, which Suarez said may have potential for further development.

"We do want to take that capability and learn and apply it to any other market it might be relevant to," Suarez said.

Smith said Walmart is working to expand online overseas. It is offering home delivery of groceries in Britain and Japan, and in Brazil it already offers 10 times as many products online as customers can find in stores, Smith said.

Bentonville-based Walmart has launched a limited internet business in Canada and is starting one in China.

Smith said the company is sticking to its model of minimising operating costs, buying for less and passing savings on to customers, which she said results in sales growth. The company also is seeking more consistency from country to country and has undertaken a two-year rollout of a new accounting system, she said.

Walmart had to make concessions for the Massmart deal to go through, including promising to honor existing labor agreements for three years and not lay off any workers for two years.

"We think in that market that's what the (employees) want and that's the prevailing practice," Suarez said, noting that the company follows the law wherever it operates.

Walmart also plans to spend $14m to help local farmers and suppliers gear up to business with it.

Suarez noted South Africa's Competition Commission's approval of the deal could be appealed, but he expects it to close as scheduled.