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