UPDATE 1-S.Africa's Woolworths sets up shop in Nigeria

JOHANNESBURG Oct 12 (Reuters) - High-end South African supermarket chain Woolworths is to open three stores in Nigeria in December, its first foray into Africa’s most populous nation as it counters a move into the poorest continent by the world’s biggest retailer, Wal-Mart.Woolworths , which sells clothing and upmarket food similar to Britain’s Marks and Spencer , said on Wednesday it had signed a joint venture with Nigeria’s Chellarams and hoped to open seven further stores in the west African state over the next two years.”We are confident about our investment in Nigeria and … the growth prospects of the Nigerian market,” said John Fraser of Woolworths’ international division.”The country has a large population with significant and growing middle and upper-income groups.”Wal-Mart completed its $2.4 billion purchase of a 51 percent stake in South African retailer Massmart in June, giving it a platform for expansion in a continent that will be home to 2 billion people by 2050.In anticipation of a Wal-Mart squeeze, established South African retailers such as Massmart rivals Shoprite and Pick n Pay have rushed to lay out continental expansion plans.Massmart has 288 stores in 12 sub-Saharan African countries through its various wholesale and retail chains, although the continent’s biggest grocery seller remains Shoprite, with outlets in 15 countries outside South Africa.Woolworths is now in 10 frontier African countries — Botswana, Namibia, Lesotho, Swaziland, Ghana, Kenya, Tanzania, Uganda, Zambia and Mozambique.It has also announced plans to open in Angola, Africa’s biggest oil producer after Nigeria, as part of an overall attempt to double its African footprint in the next three years.Even though African per-capita incomes are among the lowest in the world, a decade of strong economic growth and rapid population expansion have attracted the attention of global service industry executives.According to a study by management consultancy McKinsey, African consumer spending is set to grow from $860 billion in 2008 to $1.4 trillion in 2020. Rapid urbanisation across the continent is also making it easier to serve African markets.Woolworths shares were up 1.4 percent at 1227 GMT, narrowly stronger than the Johannesburg stock exchange’s top-40 blue-chip index .Massmart and Shoprite shares were down 0.1 percent and 0.5 percent respectively, while Pick n Pay stock was up 1.1 percent.