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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
Total retail outlets by regions - 2010

Source: New Zealand Retailers Association, 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


2010
7%
4%
6%

Supermarket and grocery


stores ($15288m)

5%

Fresh produce ($963m)


Liqour retailing ($1250m)
Other food retailing
($749m)
Takeaway food retailing
($1327m)
78%

Source: New Zealand Retailers Association, 2010; NZ Institute of Economic Research (NZIER)
Note: Values of sales

2004

The top 10 retailers by sales by year


ending 2008

Source: New Zealand Retailers Association, 2010