Wal-Mart Updates: Massmart Deal Approved, Mobile-Payments Initiatives Continue

by Trefis Team
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Last week was eventful for the world’s largest retailer, Wal-Mart (NYSE:WMT). According to reports, Wal-Mart is presently leading an initiative to develop a more advanced mobile payment system. It is working with other retailers including Target (NYSE:TGT) on building a similar technology that is employed by Google Wallet and ISIS. This technology enables users to make secure payments by simply tapping the phone on any Pay-Pass-enabled terminal at checkout.

We believe this new technology has a huge growth potential within the mobile payments industry. Retailers like Wal-Mart and Target could leverage their customer networks, wide reach and existing business models to increase adoption rates for their future mobile payments platform.

Wal-Mart is also working toward establishing a larger presence in the highly competitive Southern California grocery business. According to Steven Restivo, Wal-Mart’s senior director of community affairs, Wal-Mart plans to open 13 neighborhood markets in California. This would likely intensify competition in the region. The existing supermarket chains like Ralphs and Vons are losing their share to smaller competitors such as Trader Joe’s and new rivals like Target. ((Wal-Mart making big push into Southern California grocery market, Los Angeles Times))

In a recent development, Wal-Mart has won a final go ahead in the Massmart deal. A South African court dismissed an appeal from government and unions to roll back approval for Wal-Mart’s acquisition of Massmart. [1] Last year, Wal-Mart bought a 51% stake in Massmart for $2.4 billion. We believe Africa could act as a crucial base for Wal-Mart to target other local countries in the region. Countries such as Nigeria are gaining greater appeal due to rising affluence levels and increasing size of the middle class.

In the past week, Wal-Mart’s share price saw less volatility and witnessed a marginal increase of 1%.

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Notes:
  1. See: Wal-Mart wins final go-ahead for Massmart deal, Reuters []
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