Massmart 'was only third choice'

Walmart should have preferred to buy Shoprite or Pick n Pay - with their strong food offerings.

That's the surprising conclusion of research into the SA market by London-based Planet Retail.

Global research director Natalie Berg said Pick n Pay would have been "much more complementary" to Walmart.

But Massmart's Foodco pilot chain impressed her.

"We're talking clean aisles, strong non-food merchandising, and all with a very Walmart/value-led style," said Berg.

Should the acquisition be successful, Walmart is likely to roll out the Cambridge Food chain to help Massmart to grow food sales.

Shopper loyalty is the next battleground in South Africa, said Berg. The aim is to gather customer data and to send out tailored marketing messages and improve the relevance of merchandising in store.

She said SA retailers should be doing everything to reduce costs.

Planet Retail expects consumer spending in SA to increase 54% by 2015, on the back of both rising incomes and a young population growing by 6.1%.

The middle class now comprises one-third of SA's estimated 50 million population.

Boris Planer, director of macroeconomics at Planet Retail, said: "SA is increasingly becoming one of the world's big success stories. Its middle class is already larger than the national populations of many EU member states, and its regional growth prospects make it the ideal springboard for a continent with one billion inhabitants."