Former Shoprite CEO Whitey Basson used clever tricks to ensure Walmart did not crush Shoprite and other South African retailers.
He revealed his business manoeuvres during an interview with Bruce Whitfield about his authorized biography, Whitey.
Basson said that when Walmart decided to enter South Africa, the company met with him to acquire Shoprite.
“The Walmart guy was in my office and said he wants to buy Shoprite. I said I was not sure if it was up for sale but ask Christo Wiese. I knew he was going to say no,” Basson said.
Basson was concerned that Walmart would acquire Pick n Pay if they could not get their hands on Shoprite.
With Walmart’s deep pockets and exceptional retail expertise, they could crush all other retailers in South Africa.
At the time, Walmart had over 9,000 retail stores under 69 different brands and banners in 28 countries.
It had annual sales of $419 billion and employed more than 2 million associates worldwide. It was on an expansion drive, which scared most retailers who had to compete against them.
Basson diverted Walmart’s attention away from Pick n Pay and convinced them to buy Massmart instead. It helped that he knew former Massmart CEO Mark Lamberti well.
He worked with Walmart and Lamberti to facilitate the Massmart acquisition, which was concluded in 2011.
“I showed them Massmart is what they should go for. I told them Lamberti prepared it for you — he is a Walmart man. They bought it hook, line, and sinker,” he said.
To limit Walmart’s ability to use its financial muscle and retail expertise to crush Shoprite, Basson ensured Massmart remained listed on the JSE.
“I spoke to the government to make sure that Walmart will keep Massmart listed on the Johannesburg Stock Exchange (JSE),” he said.
“Being listed kept a barrier on Massmart. Nobody wants to hear that their share price dropped 20% or 30%.”
Basson said he knew that, by being listed on the JSE, Massmart could not make very aggressive business decisions.
“If they were allowed to do it, they could do it out of their petty cash. They could destroy other South African retailers out of their petty cash,” he said.
Ensuring that Massmart remained listed forced them to report back to their shareholders and limit the freedom with which they operated.
However, Massmart faced headwinds in South Africa, with the company closing Game stores and selling Cambridge Food and Rhino Cash and Carry grocery outlets, with their attached liquor stores, to Shoprite.
As a result, Walmart has bought out Massmart’s remaining shareholders and delisted the company from the JSE.
A version of this article was first published by Daily Investor and is republished with permission.