THE SUPERMARKET REVOLUTION:
Gauging the transformation of food retail in the
Southern African region
OUTLINE
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•
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Debates
Research Methodology
Findings: The Knowns/unknowns
Sub-regional analysis
A Systems View
Conclusion
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.
DEBATES
Reardon's waves of retail transformation in emerging markets
(adapted from Reardon and Gulati, 2008 and Dakora, 2012)
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)
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
Competitive structure of the 9 emerging markets Tesco operates in for 2009/10
OUTLINE
Source: Wrigley and Lowe (2010) –
Adapted from Bank of America/Merrill Lynch, 10
September 2010
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).
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
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
OVERVIEW: Actors
SHOPRITE
Source: Shoprite Integrated Report (2014)
OVERVIEW: Actors
PICK n PAY
Source: www.picknpay-ir.co.za
OVERIEW: Actors
WOOLWORTHS
Source: Woolworths Integrated Report 2014
OVERVIEW: Actors
WALMART/MASSMART
Source: www.corporate.walmart.com & www.massmart.co.za
OVERVIEW: Drivers
Sub-Saharan Africa’s most populous cities
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
OVERVIEW: Drivers
A growing middle class?
Distribution of the African population by Class
Source: African Development Bank 2011 (www.afdb.org)
Shoprite and Pick n Pay's FDI by country (2003 -2013)
Wesgro 2014
ZARm
R 1 200
R 1 000
R 800
R 600
R 400
R 200
R0
Shoprite
Pick n Pay
Shoprite's FDI into SSA countries (2003 -2013)
R 700
R 600
Pick n Pay's FDI into SSA countries and Indian Ocean
islands (2003-2013)
R 400
R 250
R 300
R 200
R 200
ZARm
ZARm
R 500
R 100
R 150
R 100
R 50
R0
R0
2004
2005
Nigeria
2006
2007
Angola
2008
2009
Malawi
2010
2011
2012
2013
Congo (DRC)
OVERVIEW: Drivers
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Angola
Zambia
Malawi
Congo (DRC)
Mauritius
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
OVERVIEW:
Sub-Regional Trends
CONCLUSION
World systems
Food Regimes
Supermarket Revolution
Agro-Processing &
Distribution
Producers
(farmers and firms)
Consumer
s
The Supermarket Revolution Contextualised
THANK YOU