The internationalisation of supermarkets and the nature of competitive rivalry in retailing in southern Africa¹

1 This paper draws from research undertaken for UNU-WIDER by das Nair & Chisoro (2015, 2016, 2017), Ziba & Phiri (2017) and Chigumira et al. (2016).

ABSTRACT

In the past two decades, southern African countries have experienced rapid growth and spread of supermarket chains. This paper assesses the internationalisation of supermarkets and potential reasons for the uneven outcomes seen in different countries in the region. Several factors account for the spread, including rising urbanisation, increasing per capita income, greater economies of scale and scope, and more efficient procurement and distribution systems. However, the current literature does not adequately consider the importance of culture, proximity to suppliers and impact of policy objectives of national governments on the success of supermarkets in host countries, especially in developing countries. It also does not consider the nature of competitive rivalry between supermarkets and how this affects internationalisation. This paper highlights the importance of these factors in understanding the outcomes in selected southern African countries.

KEYWORDS:

• Internationalisation
• supermarkets
• competition
• southern Africa
• market power

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 This paper draws from research undertaken for UNU-WIDER by das Nair & Chisoro (2015, 2016, 2017), Ziba & Phiri (2017) and Chigumira et al. (2016).

2 Supermarkets, cash-and-carrys, wholesalers with retail offerings (hybrid) as well as informal ‘spaza’ shops.

3 Unitrade Management Services, Buying Exchange Company, Independent Buying Consortium, Independent Cash & Carry Group, Elite Star Trading etc.

4 The UK Competition Commission in its retail market inquiry defined geographic markets as being limited to 5–15 minutes drivetime depending on whether they were large, mid-sized or convenience grocery stores.

5 JD Group Limited/Ellerine Holdings Limited, 78/LM/Jul00.

6 Annual Reports of the listed supermarkets confirm this.

7 Revenue or sales by country for each supermarket is a better measure. This data is however not consistently publicly available for all supermarkets.

8 There is antagonism towards South African supermarkets because of their procurement practices that favour South African imports even when there are local options (Abrahams, 2009). See das Nair & Chisoro (2016) on the impact on local suppliers.

9 An indication of the extent of its internationalisation (Dörrenbächer, 2000).

10 http://www.financialmail.co.za/coverstory/2016/06/03/can-pick-n-pay-regain-its-former-glory, accessed 1 October 2016.

11 http://www.theaustralian.com.au/business/wall-street-journal/walmarts-growslow-with-massmart-in-africa/news-story/8c218d4270ac5c01329e2b87d753d1f5, accessed on 10/03/2017.

12 Although Choppies has not entered Zimbabwe through a JV. The reason for this exception is unclear.

13 The role of South African property developers operating in the region requires further research.

Additional information

Funding

This work was supported by UNU Wider (https://www.wider.unu.edu/project/regional-growth-and-development-southern-africa).