Shingie Chisoro Dube And Mmamoletji Thosago
The growth of South African supermarket groups in southern Africa has not translated into increased participation of small local suppliers in supermarket value chains. Small suppliers refer to organisations with less than 50 employees and an annual total turnover of less than R13 million.1 Building on a previous article in this Review2, this article draws insights from research conducted by CCRED, ZIPAR and ZEPARU on supermarket value chains in South Africa, Botswana, Zambia and Zimbabwe.3 Based on interviews with suppliers and supermarkets, we focus on supermarkets’ centralised procurement, trading terms and private standards and the implications for local supplier participation in southern Africa.
In order to achieve economies of scale, supermarket groups centralise procurement activities. This shifts decision making rights from regional store managers to the head office level. This has the effect of excluding smaller suppliers from supply chains due to supermarkets contracting a few large suppliers with scale to serve outlets across the region. 4, The effects are important for small suppliers and new entrants located outside the head office country who find it challenging to be listed on the supermarket’s supplier database.