Institute of Food, Nutrition and Human Health Paper 119.180 August 2012
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Institute of Food, Nutrition and Human Health
Paper 119.180
August 2012
Retail industry- historical development
• Pre-development – before 1945
• Customer service is great and relationships are
important
• Food is large part of the family budget
• Sopping is social event, source of information
• Development (past war) – 1945-1975
• Technology innovations – TV and radio
• Regional brand become national brands
• Shopping changes from daily to one week
• The customer become ‘consumer’
• Mass market model appeared
Retail industry- historical development
• Saturation – 1975-1990
• Too many stores, too many products,
too many logistics systems, too any deals
• ‘Sameness’ in the industry
• Money more important than customer service
• Decline – 1990-1999
• Food away from home (50% of all food consumed in
the US in the mid 1990s is prepared outside home)
• Shopper loyalty
• Concentration and globalisation
Big achievements in retail industry
Supermarketisation in developing countries
• Demand by consumers for supermarket
services
– Demand incentives - urbanisation; women into
workforce, demand for convenience and processed
food, reduces prices
– Demand capacity – increased incomes, rise of
middle class, increased demand for processed food,
greater variety with lower price, refrigeration
ownership
Supermarketisation in developing
countries - cont
• Supply of supermarket services
– Supply incentives - slow development before1990s,
saturation and intense competition in the home
markets, higher margins and weak competition in
developing countries. (early entree – better locations)
– Supply capacity – liberalisation of FDI in retail, retail
procurement, logistics technologies and inventory
management were revolutionised in 1990s
Supermarketisation in developing
countries
• First wave – major cities in larger or richer
countries of Latin America
• Second wave – East/Southeast Asia and
Central Europe
• Third wave – small or poorer countries of Latin
America and Sothern and Eastern Africa
• Fourth wave – South Asia and Western Africa
Supermarket development in Central and
Eastern Europe (CEE)
• First wave – mid 1990s – Northern CEE countries (Czech Republic, Hungary, Poland, Slovakia) with share of supermarkets in food retail is about 40-50% in 2003
• Second wave – southern CEE (Croatia, Bulgaria, Romania, Slovenia) with share of supermarkets in food retail is about 25-30% in 2003 and growing rapidly
• Third wave – Eastern Europe - with share of supermarkets in food retail in Russia is about 10%
Supermarket development in Asia
• First wave – early 1990s – East Asia (Korea,
Taiwan with share of supermarkets in food retail
is about 50-60% in mid 2000s
• Second wave – late 1990s Southeast Asia
(Indonesia, Malaysia, Thailand) with share of
supermarkets in food retail is about 30-50% in
mid 2000s
• Third wave – early 2000s – China, India,
Vietnam with share of supermarkets in food retail
is about 2-20% in mid 2000s, supermarket sale
growing 30-50% a year in China
Key points of supermarket development
• From earliest to later adopter of supermarket,
reflecting income, urbanization, infrastructure and
policies
• Large differences between sub-regions and
countries
• Slower growth in the supermarkets’ share of
fresh food
• Supermarket sector is increasingly
multinationalised and consolidated
• Spread among richer, middle and poor costumer
segments and big and small cities and towns
Key points of supermarket
development – cont
• Objectives of supermarket chains –
– Qualitative – to increase quality and safety
of the products
– Quantitative – to reduce costs and increased
volume procured
• Shifting from old procurement model based on
sourcing products from traditional wholesalers
and wholesale markets to a new procurement
system
Four pillars of a new kind of
procurement system
• First pillar – towards centralisation and
regionalisation of procurement
• Second pillar – shift towards use of specialised
wholesalers and logistics firms
• Third pillar - towards preferred-supplier system
• Fourth pillar – the rise of private standards
Retail industry in NZ
Source: New Zealand Retailers Association, 2010
Total retail outlets by regions - 2010
Retail industry in NZ - Retail outlets by store
type - 2010
Retail industry in NZ
Retail sales by sector – 2010, ending March 2010
Source: New Zealand Retailers Association, 2010
Food retailing structure in NZ – 2010 and 2004
Source: New Zealand Retailers Association, 2010; NZ Institute of Economic Research (NZIER)
Note: Values of sales
78%
5%
6%
4% 7%
Supermarket and grocery stores ($15288m)
Fresh produce ($963m)
Liqour retailing ($1250m)
Other food retailing ($749m)
Takeaway food retailing ($1327m)
2010
2004
The top 10 retailers by sales by year
ending 2008
Source: New Zealand Retailers Association, 2010
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