15 September 2011
South African retailer Woolworths has formed a joint venture in Tanzania and Uganda with Tanzanian businessman and former franchise partner Ali Mufuruki, in an effort to accelerate its expansion into the rest of the continent.
“Joint ventures with local partners is the new business model for our pan-African expansion plans,” Woolworths’ retail operations director Glenn Gilzean said in a statement last week. “We are moving away from the franchise model we had in the past.
“It’s not only a better profit model for our business, but it’s also better for our customers.”
Increasing store sizes
Woolworths currently has one store in Uganda and three in Tanzania, and will add another store in Uganda and a further two in Tanzania by the end of the year.
Woolworths aims to open 16 stores in African countries this year, taking the total number of stores to 60 in the current financial year. Woolworths also intends to open stores in Nigeria and Angola.
The new stores will be larger than current ones – retail space will increase by 42% in the current financial year and by an estimated 145% over the next three years.
“I am delighted to be part of this joint venture with Woolworths, to grow this market and offer our customers the choice and quality Woolworths is famous for,” said Mufuruki. “Also, new stores will create much needed employment and be good for the economy.”
Major opportunities for growth
Gilzean said the company regarded trading beyond South African borders as a major opportunity for growth, and believed it would deliver a meaning contribution to the group’s profit.
He said Woolworths was also confident about the growth prospects of its investment in Uganda, Tanzania and across Africa, pointing out that consumer spending now accounts for more than 60% of African GDP, and that this figure would increase with the growth of the upper and middle income groups.
“Our joint ventures mean we can deliver customers the best retail offering possible tailored to local market needs,” he said. “Our partners bring knowledge of local trading conditions and we bring the quality, value, innovation and fashion our South African customers know and appreciate.
“It’s the best of both worlds.”
Larger selection of merchandise
Woolworths has refined and improved its merchandise offering for customers in selected African countries, and customers can now look forward to a larger selection of fashion and general merchandise.
This includes formal wear, children’s wear, beauty products and casual wear, including the Woolworths Re: and Studio: W fashion brands which have recently been re-launched in South Africa.
Woolworths has had a presence in African countries for over 10 years and currently has stores in Botswana, Ghana, Kenya, Lesotho, Mozambique, Namibia, Swaziland, Tanzania, Uganda and Zambia.
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