African-Based World's Largest Retailers: ShopRite, Pick n Pay, SPAR

Growing African Retail Industry Chains and Companies With the Largest Revenue

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When you look at the list of the largest African retailers, it seems obvious that retail groceries and supermarkets are niche with the largest potential for retail growth here. According to the Euromonitor, the popularity of retail supermarket chains continues to rise among the largest portion of the community -- low- to middle-income consumers. It should come as no surprise that the largest African retail chains are mostly grocery store and supermarket chains.

The South African Hub 

African retailing was mostly about South African retailing prior to 2014, where almost all the continent’s bustling commerce activity takes place. Cities like Johannesburg and Durban have mega malls that are over 37-acres large -- roughly half the size of the Mall of America in Bloomington, Minnesota. Considering the lack of globalization, African retail companies, particularly their food retailers, are large in comparison to other retailers around the world.

Although it hasn’t always been the case, retailing in South Africa is expected to grow, according to Euromonitor. That growth might be affected by economic instability and additional labor disputes within the mining industry, however. As a mature market, South Africa has limited retail expansion opportunities compared to other African countries where organized activity by retail chains is limited or nearly non-existent.

Economic, Infrastructure and Other Factors

The African retail industry lacks infrastructure, so supermarket companies like ShopRite Holdings are finding big success in markets like South Africa by investing in local distribution centers, which cuts costs and allows ShopRite to supply products to a larger portion of the population.

As the African economy continues to improve and expand, retail groceries continue to drive the industry. Furniture and housewares stores are also expected to see an increase in profitability as more consumers become able to afford the items sold at these types of retailers. In a nation that is home to some of the poorest countries in the world, the retailers expected to prosper in the short term are those that supply basics to the emerging middle class. The World Bank listed 122.7 million Africans in that middle-class range in 2014, which is 30 percent higher than it was 13 years before. 

In contrast to the extreme poverty found in many African countries, it is predicted that the number of billionaires in countries like Nigeria, Ghana, Kenya and Mozambique will almost double by the year 2030, according to Bizcommunity. This increased wealth presents a significant opportunity for luxury retailer brands and designer goods. Global management consulting firm Bain & Company predicts an 11-percent growth in this upper echelon of retail consuming. The sale of luxury goods is predicted to increase by more than 30 percent by 2019, according to Euromonitor.

Internet Retailing 

Internet retailing has been increasing steadily in Africa, seeing double-digit growth in past years, due in part to the rapidly increasing sale and use of smartphones and other mobile devices here.

As virtual retailers move into and expand in the African markets, the orientation of African consumers toward mobile technology should motivate more than one retailer to put emphasis on developing m-commerce, possibly skipping the development of online Internet shopping websites altogether.

The growing promise of profitability to virtual retailers in general should encourage them to expand in more established markets like South Africa, then to establish the infrastructure necessary to expand into other African countries as well.

The Most Significant Retailers

One of the greatest boosts to South African retailing was the 2013 corporate buyout of Massmart by Walmart, the largest U.S. retailer. The $2.4 billion deal gave Walmart access to over 50 million new customers, according to BusinessDayOnline.

With this foothold in the African retail industry, Massmart leaders launched a pilot store in Nigeria in 2014 that was designed to directly compete with Africa's largest domestic retail chains: ShopRite, Pick n Pay, and the SPAR Group. There's no guarantee that Walmart will successfully challenge these hometown favorites, however, considering that it was forced to close approximately 50 under-performing stores in Brazil and China in 2015 and 2016. 

In international markets outside the U.S., consumers have proven fiercely loyal to local brands, independent retail sellers and local markets that are as much about social connections as consuming. The arrival of “foreign” retailers is not just about selling different goods. It's about creating a different consuming culture. Even if African consumers are ready and willing to do that, Walmart/Massmart will have to compete with other international retailers like France's Carrefour, which has made it clear that it intends to do the same.

The current positive retailing trends in the African retail industry are expected to continue to grow for the biggest African retail companies, due in part to the expansion of the African retail industry itself, which will provide employment opportunities and help stimulation the African economy overall. However, this may be offset somewhat by international retailers that struggle with difficult or impossible supply logistics, and choose to import products from established global suppliers instead of African product producers.

The inability of local independent sellers and entrepreneurs to compete with a global supply chain is a familiar story retold in small towns throughout the U.S. after Wal-Mart muscles its way into town. Not everyone considers this to be a bad retail story with an unhappy ending for consumers. How or if the plot will change in Africa will depend equally on consumer desire and the ability of the African retail industry to respond to it.

Each year a “Global Powers of Retailing” report is compiled by Deloitte Touche Tohmatsu and STORES Magazine, ranking retailers from all over the world according to total revenue. In 2013, the 16th annual list was released, ranking 250 retailers from 32 different countries.

What follows is the largest retail companies with headquarters in South Africa. This 2013 Global Powers of Retailing list reflects the revenue that was generated in fiscal year 2011 for each of these South African retail companies, which was a year of recovery from the global retail recession. This list is arranged according to the revenue ranking assigned to each of the South African retail companies when compared to the revenue of all retail companies worldwide.

2013 Largest Retailers in South African and Revenue Rankings

Top South Africa Global Retail Ranking #94 - Shoprite Holdings
Apparel/Footwear Specialty, Convenience/Forecourt Store, Drug Store/Pharmacy, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Ranking #125 - Steinhoff International Holdings Ltd. 
Specialty Retailer

Ranking #137 - Pick 'n Pay 

Ranking #172 - SPAR Group 

Ranking #234 - Woolworths Holdings Limited 
Department Store

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