THE SUPERMARKET REVOLUTION: Gauging the transformation of food retail in the Southern African region

Transcription

1 THE SUPERMARKET REVOLUTION: Gauging the transformation of food retail in the Southern African region

2 OUTLINE Debates Research Methodology Findings: The Knowns/unknowns Sub-regional analysis A Systems View Conclusion

3 DEBATES Supermarket Revolution Hypothesis Reardon et al. (2003) In the context of developing countries, supermarkets Are becoming an increasingly important form of retailing; Will progressively expand their sale of fresh food; By introducing modern procurement systems with associated safety and quality standards, which have implications for food production and distribution; and hence Serve to create requirements which could exclude small-scale farmers from supermarkets supply or value chains.

4 DEBATES Reardon's waves of retail transformation in emerging markets (adapted from Reardon and Gulati, 2008 and Dakora, 2012)

5 DEBATES continued.. Critique of the Supermarket Revolution Hypothesis Humphrey (2007) has critiqued Reardon s hypothesis o Suggests, supermarkets have had limited success in capturing fresh produce sales in emerging economies, where wetmarkets have a significant market share even where stores are well located and had wide population coverage (e.g. China). until lower-income consumers become cash-rich and time-poor, the advantages of one-stop shopping will be limited. Humphrey (2007:439)

6 DEBATES continued.. Critique of the Supermarket Revolution Hypothesis Retail giant Walmart, which has been a leader in the U.S. retail industry for decades, has never managed to attain a similar position in China...after almost two decades in the country The retailer has had problems in understanding..chinese consumers as their buying decisions are not always price driven. They are more inclined towards tailor-made products and a shopping environment that reflects local preferences. Forbes (Online) January 30, 2015

7 Competitive structure of the 9 emerging markets Tesco operates in for 2009/10 Source: Wrigley and Lowe (2010) Adapted from Bank of America/Merrill Lynch, 10 September 2010 OUTLINE

8 DEBATES continued.. Critique of the Supermarket Revolution Hypothesis Similarly. Evidence of the resilience of informal retail channels in the supply and egg buying patterns in the city of Dar es Salaam, Tanzania (Wegerif, 2014).

9 OVERVIEW OF FINDINGS Reardon s supermarket revolution hypothesis provides the analytical lens to explore the following dynamics associated with supermarket expansion (in the context of the Southern African region): 1. Actors (Transnational Corporations) Second Tier TNCs First Tier TNCs

10 OVERVIEW OF FINDINGS 2. Drivers (Supply & Demand) Demand rising incomes associated with a growing middle class, and urbanisation Supply Country s openness to foreign direct investment (FDI), and Supermarkets procurement systems 3. Trends Trading footprints of dominant South African second tier TNCs Shoprite Pick n Pay Modes of Market entry Patterns of diffusion

11 OVERVIEW: Actors SHOPRITE Source: Shoprite Integrated Report (2014)

12 OVERVIEW: Actors PICK n PAY Source:

13 OVERIEW: Actors WOOLWORTHS Source: Woolworths Integrated Report 2014

14 WALMART/MASSMART OVERVIEW: Actors Source: &

15 Sub-Saharan Africa s most populous cities OVERVIEW: Drivers

16 Fair (2011:31) asserts, Peasant [rural] populations and urban slum populations do not have the same class interests. Peasants desire land redistribution, rural infrastructure, and stable, high food prices. While, the urban poor want industrial employment, urban infrastructure, and low living costs (including food) OVERVIEW: Drivers Sub-Saharan Africa s most populous cities

17 OVERVIEW: Drivers A growing middle class? Distribution of the African population by Class Source: African Development Bank 2011 (

18 ZARm R R R 800 R 600 R 400 R 200 R 0 Shoprite and Pick n Pay's FDI by country ( ) Wesgro 2014 R 700 R 600 Shoprite Pick n Pay Shoprite's FDI into SSA countries ( ) ZARm R 500 R 400 R 300 R 200 R 100 R Nigeria Angola Malawi Congo (DRC) ZARm R 250 R 200 R 150 R 100 R 50 R 0 Pick n Pay's FDI into SSA countries and Indian Ocean islands ( ) Angola Zambia Malawi Congo (DRC) Mauritius OVERVIEW: Drivers

19 OVERVIEW: Drivers Are TNCs modern procurement systems enabling supermarkets to become the gate-keepers of supply chains? Relationship between the number of suppliers, supermarkets and consumers in the United Kingdom (Consumer Choice, 2012) Modern Procurement Systems

20 OVERVIEW: Sub-Regional Trends

21 CONCLUSION World systems Food Regimes Supermarket Revolution Agro-Processing & Distribution Producers (farmers and firms) Consumer s The Supermarket Revolution Contextualised

22 THANK YOU