It looks like the massive American retail giant, Walmart could be coming to Australia in a move that may wipe out our local chains, according to retail experts.
Millionaire businessman Dick Smith predicts that Walmart could take over Australia’s Kmart department store chain within five years, as reported in the Daily Mail.
The Dick Smith Electronics chain founder said that the world’s largest retailer could make an offer to purchase Kmart from its Perth-based parent company Wesfarmers.
‘They’ll take Kmart, that will go first, in the next four or five years,’ he told Daily Mail Australia.
This speculation follows the merger of Walmart’s U.K. subsidiary Asda with Sainsbury’s, which effectively freed up capital for them to invest in a new market.
Walmart Eyeing Coles For Takeover
It has also been suggested that Walmart may also be eyeing Coles as the platform to enter the Australian market. This follows Westfarmers intention to demerge Coles and float in on the Australian Securities Exchange as a separate company.
What Is Walmart?
Walmart is an American retail chain specialising in discount department and grocery stores. It is famous for selling a massive variety of merchandise and has a catalogue of over 120,000 different products.
This includes the weird and wonderful from bacon-scented pillows and pickle-flavoured ice blocks, powdered peanut butter and jelly bean-flavoured milk to peanut butter and jam sandwiches in cans. Walmart also sells firearms, which won’t be permitted locally.
Kmart Staff Could Be In Trouble
Dick Smith predicted that Walmart’s first move within Australia would be a drastic cost-cutting exercise.
Smith said Walmart may sack Australian Kmart staff and offer cheaper prices by retrenching staff.
‘Walmart, they are completely ruthless,’ he said.
‘The Walmart formula is sack people. Don’t share the wealth, sack people.
‘That’s what they’ll do here.’
It’s A Rumour But Could Happen
CMC chief markets strategist Michael McCarthy said Wesfarmers would happily offload Kmart to Walmart, even though sales volumes increased by eight per cent during the last financial year.
‘That’s strictly in the rumour category but nonetheless, we couldn’t rule it out,’ he told Daily Mail Australia.
‘This is their sort of business.
‘Both Wesfarmers and Wesfarmers shareholders would be delighted if they find a buyer for Kmart – the variety store format has been under pressure for an extended period and a graceful exit from Kmart would be applauded.’
McCarthy said that while Walmart wasn’t a groceries specialist, Coles would be a better Australian buy than Kmart.
‘The steady earnings that come from the grocery business are attractive to a number of global investors,’ he said.
‘It’s a little removed from Walmart’s main business but a pure grocery play in the global context does make more sense for a group like Walmart.’
A Complete Shakeup Of Australia’s Retail Scene
Dick Smith further predicted that Walmart would later make a bid for either Coles or Woolworths, which bought out his now defunct electronics chain in 1982.
‘Walmart will come and take over either Coles or Woolworths and then Aldi will take over the other,’ he said.
No Confirmation Yet
Walmart has not made any announcement about buying Kmart, Coles or Woolworths.
Wesfarmers by law would be required to disclose such an offer to the Australian Securities Exchange.
Wesfarmers managing director Rob Scott said he has ‘no awareness’ of Walmart looking to buy Coles or Kmart.