Entry mode issues in the internationalisation of South African retailing

Abstract

The recent increase in international retail activity within Africa has plunged the continent into a retail revolution. At the forefront of this revolution are major retail chains from South Africa. Although, this increase in retail internationalization in Africa has stimulated FDI and trade within the continent, South African retailers making this move have generally been criticised for their inadequate contribution to local economies of the countries they go into. This paper explores the ways in which South African retailers expand into other African countries and the circumstances that make this process different from other parts of the world. More specifically, this paper examines how the choice of entry mode into African countries can either mitigate or further complicate the process. The paper analyses case studies of five major South African retails with operations in other African countries. In-depth interviews were undertaken with senior managers in these organisations as part of the study. The findings of this study indicate that the “mode of entry” can be used to mitigate the risks associated with retail internationalisation in Africa. The study was limited to analysis of the retail companies within South Africa, and therefore viewpoints of the target country stakeholders (local suppliers, customers, local retailers, government and others) remain to be explored in future work.