A few vertically integrated retail chains increasingly dominate South Africa’s agro-food supply chain. M+M Planet Retail (2004) placed the market concentration among retailers to be as high as 96% for the top four chains leaving only 4% to the small competitors. The onset of this trend has led to the demise of a large number of “mom and pop” general dealers in favour of the sleek new stores as they were either priced or bought out of business. Players in the fresh produce market have proved to be resilient to this onslaught. The green grocers and hawkers have survived the “category killers” and appear to be able to face this competition head on. It is this resilience that is of interest to this study. The review of literature revealed a dearth of studies and hence methodology into the nature of the interaction between the three forms of retail. A preliminary survey also revealed the lack of coherent and detailed information, particularly among the greengrocers and hawkers. Thus the established methods of modelling competition analysis, namely the Structure Conduct Performance and the New Empirical Industrial Organisation frameworks, were deemed inappropriate. The study therefore took an exploratory form that relied on measures of central tendency and the perceptions of leading industry practitioners to reveal the nature and magnitude of competition between supermarkets, green grocers and hawkers. The study primarily drew on ‘Porter’s forces’ competition model to structure the investigation. It also employed a chain analysis approach including supply and value chain analysis (VCA) tools to analyse this competition. The study therefore sought to unpack the retail sections of the three chains in terms of identifying role-players; their relationships and interaction; as well as to account for the relative values that different types of fresh produce retailers generated for the final consumer. Besides the contribution to the general body of knowledge about the nature of the system that feeds us, this study provides means for the competing channels to upgrade and improve efficiency. A developmental and empowerment point of view was emphasised in the research, as such, identifying possible measures to upgrade and improve the informal sector was given precedence. The objective was to describe and analyse the competitive environment in which FFV was retailed in the Tshwane through a determination of the competitive and strategic behaviour of retailers and a mapping the flow of value. It was hypothesised that fresh produce retailers competed by varying elements of their marketing mix to suit their niche markets. The investigation was conducted in two phases; a pilot study followed by a survey involving a six-step sampling frame targeting a total of 120 respondents including 15 supermarkets, 30 greengrocers and 75 hawkers. This analysis was limited to the bounds of the Tshwane metropolitan area, South Africa, and focused on six fresh fruits and vegetable lines concurrently traded by supermarkets, greengrocers and hawkers. The main findings of the investigation include that tri-dimensional FFV retail competition was most intense in the middle-income areas of the city. The low income areas were dominated by informal traders while the large supermarkets chains and the large format greengrocers dominated the high income areas. The non-syndicated greengrocers were confined to the middle-income areas where competition was most intense. When the marketing strategies and chain maps were compared it was concluded that the tridimensional competitive environment was facilitated by the existence of multiple niches; the equalising effect of produce market based pricing; the general upgrade in product quality offered by all retailers; characteristics of fresh produce itself as compared to other foodstuffs and the existence of multiple market niches in the sector. Concluding the study were recommendations to improve (upgrade) the marketing performance of each of the three channels.
Dissertation (MSc(Agric) (Agricultural Economics))--University of Pretoria, 2007.