“Ultimately, Massmart’s procurement philosophy is driven by consumer choice. Massmart procures products from suppliers because consumers buy those products from Massmart,” his witness statement read.
“Other than for the purposes of diversity of supply and BBBEE (Broad-based Black Economic Empowerment) considerations, it is irrelevant to Massmart whether a particular product is locally manufactured, locally assembled with all or some foreign components or fully imported.”
He said although Massmart attempted to procure its products as cheaply as possible, its business was “premised on the assumption that all of Massmart’s major competitors are able to procure goods from suppliers at substantially similar prices”.
“As the acquisition of Massmart by Walmart will not have a material impact on these fundamental economic determinants, the basic procurement patterns currently seen within the Massmart business are unlikely to be changed significantly by the proposed transaction.
via www.iol.co.za
Grant Pattison makes a few very important points here
- The consumer is not concerned about the BEE performance of Massmart or any of its suppliers. And this applies to all other similar-type companies (Woolworths, Spar, Checkers, Pick 'n Pay etc).
- Massmart (and by implication all of its competitors) are also not concerned about the percentage of local content. The issue here is competitiveness and price.
- Why would this change when Walmart becomes the major shareholder?
Well put Grant.
Comments