Shoprite takes on Wal-Mart with $416 million upgrades

Shoprite, Africa's biggest grocery retailer, is spending $416 million to expand and upgrade its distribution centres as South African merchants gear up to take on U.S-based Wal-Mart Stores Inc.


Shoprite, one of the companies seen likely to lose from the entry of the world's biggest retailer into South Africa, said on Tuesday it spent 1.5 billion rand in the year to June at its centres in Durban, Pretoria and Cape Town and would spend a similar amount in the coming year.


"We think that we can face competition with comfort," Whitey Basson, Shoprite's chief executive said at the company's results presentation.
"So we won't stand here and say: 'We don't expect competition'. But we ... will try, and probably succeed in maintaining these sorts of growth rates."

Wal-Mart took a 51 percent stake in local wholesale retailer Massmart in June this year in a $2.4 billion deal, giving it a substantial presence in Africa.

Wal-Mart is now expanding Massmart's grocery chain, a move that pits the Arkansas-based retailer against dominant food retailers such as Shoprite, Pick n Pay and Spar.

Shoprite's Deputy Managing Director Carel Goosen said the money to being spent on distribution centres would be on top of its annual capital expenditure of around 1.2 billion rand.