Why Global Brands Like Walmart Are Eyeing South Africa in 2025

Johannesburg, South Africa — September 11, 2025

South Africa is on the radar of global retailers. After U.S.‑based Walmart announced plans to open its first Walmart‑branded stores in the country by the end of 2025, attention quickly turned to why other foreign brands are considering an African expansion. A combination of economic reform, a large youth population, improving logistics, and pro‑business policies has created a fertile environment. This feature explains why companies are lining up to invest and what it means for consumers, rivals, and the continent.

Economic Growth & Consumer Power

South Africa’s economy is growing slowly but steadily. Official data show that gross domestic product (GDP) expanded by 0.8 % in the second quarter of 2025, its fastest pace in two years. The improvement follows a 0.1 % rise in the first quarter and reflects broad‑based gains across mining, agriculture, and services. Economists note that household spending has picked up thanks to interest‑rate cuts, although long‑term growth remains below 1 % a year. Unemployment is still high at 33.2 % and inflation ticked up to 3.5 % in July. These figures highlight both opportunity and risk: a large workforce and rising household demand, but structural challenges that limit purchasing power.

Foreign direct investment (FDI) trends point to growing investor confidence. In the first quarter of 2025, South Africa recorded 11.7 billion rand ($661 million) in FDI inflows, up from 7.5 billion rand in the final quarter of 2024. The South African Reserve Bank attributed the increase to foreign parent companies increasing their equity in local subsidiaries. Analysts view the uptick as a sign that multinationals are placing long‑term bets on Africa’s most industrialised economy despite slower growth.

Demographics also matter. South Africa has a population of roughly 64 million people and a large youth cohort. Internet access is widespread: more than 75 % of households have internet access, and 97 % of households own at least one mobile phone. Marketing analysts estimate that over 50 million South Africans use the internet, with mobile connections exceeding the total population, and 99.3 % of internet users owning smartphones. People spend more than nine hours per day online on average, using the web to search for information, research products, and stay in touch. This digital literacy, combined with a growing middle class and urbanisation, gives global brands a ready customer base.

Retail Market Shake‑Up

South Africa’s retail landscape is being reshaped by a mix of domestic champions and foreign entrants. Walmart’s planned stores build on its ownership of Massmart (operator of Makro, Game, and Builders Warehouse chains). A recent statement said the new stores will sell groceries, household goods, apparel, and technology items while partnering with small and medium South African suppliers. The company aims to offer high‑quality, affordable merchandise and use local sourcing to keep prices low and celebrate local culture. Sites are under development with official opening dates expected in October. Walmart’s entry marks the first time its name will appear above a storefront in Africa and will bring direct competition to giants like Shoprite, Woolworths, and Pick'n Pay.

Global e‑commerce players are already competing fiercely in South Africa. Chinese fast‑fashion retailers Temu and Shein began selling in the country in January and 2024, respectively, while Amazon launched its South African marketplace in May 2024. These platforms leverage South Africa’s high smartphone usage and improved logistics. Temu and Shein captured 3.6 % of the country’s clothing, textiles, footwear, and leather market in 2024, generating 7.3 billion rand in sales, according to a Reuters report. By contrast, international brick‑and‑mortar brands like H&M and Zara hold a combined 3.4 % share. Online shopping is growing fast: a study by World Wide Worx found that South Africa’s online retail sales reached 71 billion rand in 2023 and could account for 10 % of total retail sales by 2026. These figures show why digital platforms and brick‑and‑mortar giants are racing to secure market share.

Domestic players are responding. Takealot, South Africa’s biggest e‑commerce retailer, has recruited thousands of personal shoppers to serve townships and rural areas. The company is investing in “dark stores” and automation to speed deliveries. Despite these efforts, its market share slipped from 26.5 % to 20.9 % in 2023 as global entrants intensified competition. Traditional supermarket chains have also stepped up their game: Shoprite expanded its Sixty60 on‑demand grocery service to discount stores and is competing with Pick n Pay and Woolworths for online and physical shoppers. The competitive pressure is set to increase once Walmart stores open.

Logistics & Infrastructure Advantage

Moving goods efficiently is critical in retail. South Africa has faced bottlenecks due to power outages and ageing rail networks, but reforms are underway. In August 2025, the government announced that private companies would be allowed to run trains on the freight rail network, previously dominated by state‑owned Transnet. Eleven operators secured slots across 41 routes, adding capacity to transport bulk commodities like coal, iron ore, and fuel. The initiative aims to add 20 million tonnes of freight capacity per year from 2026/27 and help the country transport 250 million tonnes by 2029. By increasing coal export capacity by about 10 million tonnes over the next three years, the rail reform promises to relieve a major choke point for miners and exporters.

The state is also tapping international lenders to fund upgrades. In June 2025, South Africa signed a $1.5 billion World Bank loan to overhaul transport and energy infrastructure. The loan offers favourable terms and a three‑year grace period; officials say it will ease bottlenecks in rail, ports, and electricity. Finance Minister Enoch Godongwana’s budget pledges over 1 trillion rand of public investment in transport, energy, water, and sanitation. The National Treasury is also creating a credit‑guarantee platform to mobilise private investment for public infrastructure, which it expects to be operational by 2025. Roughly 70 % of South Africa’s infrastructure investment already comes from private investors, reflecting the vital role of business in building roads, ports, and power lines.

Improving logistics not only reduces costs for retailers but also makes South Africa a springboard for continental expansion. The country boasts deep‑water ports, major highways, and proximity to neighbouring markets. Companies see an opportunity to build regional supply chains, using South Africa as a base to reach countries like Botswana, Namibia, and Mozambique. Together with the trade reforms discussed below, better infrastructure makes the market attractive for multinationals.

Youth & Digital Adoption

South Africans are young and hyper‑connected. Over 50 million people use the internet, and nearly every internet user owns a smartphone. Households can access affordable data packages thanks to intense competition among mobile operators, and many people maintain more than one mobile connection. Users spend more than nine hours a day online, well above the global average, and use their devices to search for information, research products, stay in touch, and find inspiration. About 10.4 million internet users made purchases online in 2024, with 51.7 % of those purchases made via smartphones. This mobile‑first behaviour encourages global brands to design apps and websites with local consumers in mind.

Youth demographics further boost digital adoption. Approximately two‑thirds of South Africans are under 35, giving companies a generation of tech‑savvy shoppers to cultivate. Social media engagement is high: 26.7 million people use social media, and users maintain an average of eight platforms. Young consumers also value convenience and discounts; the most important factors driving online purchases are free delivery and loyalty programmes. These preferences align with Walmart’s promises of low prices and the strategies of Amazon, Shein, and Temu, which all emphasize price‑cutting and personalised deals.

Policy & Investment Climate

Trade policy and regional integration play a key role in drawing foreign investment. South Africa is one of 49 countries that have legally ratified the African Continental Free Trade Area (AfCFTA), but only about 24 of them are actively trading under the pact. The World Bank estimates that AfCFTA could increase intra‑African exports by 81 %, while Afreximbank reports that intra‑African trade already grew 12.4 % to $208 billion last year. Wamkele Mene, secretary‑general of the AfCFTA secretariat, told Reuters that Africa must accelerate the development of regional value chains to counter rising global protectionism. He warned that trade policies are being “weaponised” and said African nations need to collaborate to build industries that keep wealth on the continent

Yet challenges remain. Less than half of member states trade under AfCFTA due to slow implementation, informal trading, and weak governance. The continent faces a $100 billion annual infrastructure deficit, and business leaders warn that without better rail lines and border facilities, the free trade area may not deliver its promised benefits. The logistics reforms and loan programmes described above are therefore crucial for making the pact work.

Domestic policies also matter. The government is seeking to attract private capital by de‑risking projects and offering blended finance instruments, such as the credit‑guarantee platform expected in 2025. Business confidence improved in mid‑2025 thanks to a stable electricity supply, modest improvements in logistics, and firmer domestic demand, according to Nedbank economists. However, analysts caution that weak global demand, trade tensions, and logistics bottlenecks could still weigh on mining and manufacturing. The return of U.S. tariffs, which President Trump imposed a 30 % duty on South African goods in July, adds uncertainty. Investors will watch whether trade negotiations ease these headwinds.

Conclusion: Future Outlook for Foreign Investors and the Local Industry

South Africa in 2025 offers a paradox: growth is modest and structural challenges persist, yet the country’s large, youthful, and connected population makes it irresistible for companies seeking a foothold in Africa. Walmart’s decision to operate under its own name signals confidence in the long‑term potential despite competition from both domestic retailers and fast‑growing e‑commerce giants. Consumer‑friendly pricing, local sourcing commitments, and partnerships with small suppliers could differentiate Walmart in a crowded market.

Infrastructure reforms, including the opening of the freight rail network to private operators and a $1.5 billion World Bank loan, suggest that logistical bottlenecks are being addressed. Digital adoption rates, among the highest globally, mean companies can deploy mobile‑first strategies and build relationships with millions of online shoppers. At the same time, policy initiatives like AfCFTA and new financing instruments aim to reduce trade barriers and encourage private investment.

The next year will test whether these reforms translate into sustained consumer spending and job creation. Investors will look at how quickly new stores open, whether supply chains can handle greater volumes, and whether tariffs hinder exports. If South Africa delivers on its promise of improved infrastructure, digital connectivity, and regulatory clarity, the market could become a gateway not just for Walmart but for a wave of global brands. For local consumers, increased competition should bring better prices and more choice, while for the continent, it may signal a shift toward building home‑grown value chains that compete on a global stage.