THE acquisition of local retailer Massmart by global giant Walmart may result in lower prices, but jobs will be lost as small retailers struggle to cope with the competition
Yesterday, the Gordon Institute of Business Science in Johannesburg hosted a one-day conference themed the Walmart Effect to discuss the implications of the R16,5 billion deal.
On Friday, the Competition Commission concluded its investigation and referred WalMart's proposed acquisition of 51percent of Massmart's equity to the Competition Tribunal with a recommendation that the transaction be approved without conditions.
This stirred heated debates of how the giant retailer's bargaining power would cause loss of jobs among the small local retailers. Walmart has 8416 stores in 15 countries and has described its Massmart acquisition as its biggest in a decade. Its 2010 sales stood at $405billion (R2,95trillion).
Massmart owns Makro, Game, Cambridge, Dion Wired and Builders Warehouse. Syd Vianello, retail analyst at Nedgroup, said if Walmart was able to buy goods at a lesser price, the buying gain will be passed on to the consumer.
Vianello said worldwide practice was to source food locally: "They have said that they intend to expand their business in food but they have not quantified it . they have indicated that every new store will employ a lot of people," he said.
This would affect local retailers badly, Vianello warned. "It will accelerate the decline of small independent retailers. But that process started a long time ago. The fact is the cash and carry businesses that supply the smaller retailers have been stagnant for a long time.
"Prices will come down. In those smaller entities there are going to be job losses. But there are going to be new jobs created as the new stores open up."
Summing up the gains against the losses, Vianello said: "It may end up being neutral."
Paul Bondi, director of Rothschild, Walmart's corporate financial advisers, said Massmart had been attractive to investors for a long time. Bondi said Walmart's global practice was to source food from local producers.
"The evidence is that they help them grow with local participation. They also use their purchasing power for the benefit of the consumer."
Walmart: lower prices, fewer jobs
THE acquisition of local retailer Massmart by global giant Walmart may result in lower prices, but jobs will be lost as small retailers struggle to cope with the competition
Yesterday, the Gordon Institute of Business Science in Johannesburg hosted a one-day conference themed the Walmart Effect to discuss the implications of the R16,5 billion deal.
On Friday, the Competition Commission concluded its investigation and referred WalMart's proposed acquisition of 51percent of Massmart's equity to the Competition Tribunal with a recommendation that the transaction be approved without conditions.
This stirred heated debates of how the giant retailer's bargaining power would cause loss of jobs among the small local retailers. Walmart has 8416 stores in 15 countries and has described its Massmart acquisition as its biggest in a decade. Its 2010 sales stood at $405billion (R2,95trillion).
Massmart owns Makro, Game, Cambridge, Dion Wired and Builders Warehouse. Syd Vianello, retail analyst at Nedgroup, said if Walmart was able to buy goods at a lesser price, the buying gain will be passed on to the consumer.
Vianello said worldwide practice was to source food locally: "They have said that they intend to expand their business in food but they have not quantified it . they have indicated that every new store will employ a lot of people," he said.
This would affect local retailers badly, Vianello warned. "It will accelerate the decline of small independent retailers. But that process started a long time ago. The fact is the cash and carry businesses that supply the smaller retailers have been stagnant for a long time.
"Prices will come down. In those smaller entities there are going to be job losses. But there are going to be new jobs created as the new stores open up."
Summing up the gains against the losses, Vianello said: "It may end up being neutral."
Paul Bondi, director of Rothschild, Walmart's corporate financial advisers, said Massmart had been attractive to investors for a long time. Bondi said Walmart's global practice was to source food from local producers.
"The evidence is that they help them grow with local participation. They also use their purchasing power for the benefit of the consumer."
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