Integrating of Local Food Suppliers in Modern Food Retail in Africa:The Case of Tanzania

This study addresses three distinct but interrelated issues in the integration of local food suppliers in modern food distribution in Tanzania. These issues are: What are key factors driving the development of modern food retailing in Tanzania? What factors influence the participation of local modern food suppliers in the industry? And, finally: What policies and strategies can be adopted to increase local suppliers‘ participation in the industry? The study used a critical realism case study approach, in which nine local food suppliers and seven modern food retailers participated. Participants from two food regulators and two private sector support organisations were also interviewed. Data were collected in four regions of Tanzania: Dar es Salaam, Arusha, Kilimanjaro and Morogoro. Interviews were conducted in English and Swahili, and voice recorder and field notebooks were used in data collection. Secondary data were also used for the study and were collected from government reports, newspapers and magazines. Data were stored in Nvivo but were primarily analysed manually. A thematic analytical technique was used for qualitative data analysis. Furthermore, both within-case and cross-case study data analyses were employed for data analysis in the study. This study produced three findings: First, the study shows that the evolution of modern food retail distribution in Tanzania was accelerated by both internal and external factors. External factors are the availability of suppliers, the acceptance of trade credit and return policies by local food suppliers, administrative reason, change in lifestyle, the rise of the middle class, and institutional supports. Internal factors are innovation, quality, the availability of products, safety and return policies. Second, the study shows that the participation of local food suppliers is very low, but is increasing. Findings show that the selection of local food suppliers is influenced by satisfying government requirements, food quality, consumer feedback, packaging, reliability, acceptance of return policies and trade credit, price and adherence to Islamic practices. The study shows that a number of factors influence the establishment of the supplier-retailer relationship. These are: the acceptance of trade credit, return policies and premises visitations. Furthermore, the study shows that territory relationship and social embeddedness influence the formation of relationships between retailers and suppliers. In spite of this, the supplier-retailer relationship study shows that there is a lack of trust and commitment among actors. The study shows that payment delays limit supplierretailer relationships. Finally, the study shows that, in order to increase the participation of local food suppliers in modern food distribution in Tanzania, local food suppliers use different strategies. These strategies are the formation of networks, innovation, outsourcing and the recruitment of ix experienced staff. To increase their chances of participation, local food suppliers embarked on innovation, and the study shows that major sources of innovation are distributors, retailers and government agencies. However, the flow of information to stimulate innovation from downstream actors is limited by trade credit, consumer preferences and government requirements. The study contributes to theoretical and empirical knowledge. The study presents a new look at the formation of the supplier-retailer relationship from the perspective of developing economies in four stages. These stages include: (1) retailer evaluation of suppliers‘ reputation, (2) supplying of samples (3) supply commencing after terms are negotiated and agree upon, (4) consumer/institution recommendation and finally (5) a sustained relationship. The study also proposes a framework for understanding the evolution of modern food distribution in developing economies, with a focus on internal and external factors. In general, previous proposed theories marginalised the influence of external factors on the evolution of retail formats, which seem to be very important in Tanzania. One policy implication study suggested the formation of special financial supports for local food suppliers to help them meet their working capital when engaged in trade credit with retailers by commercial banks in Tanzania. These loan could be granted against invoice based on supply to the retailers who buying on credit. In spite of these contributions, the study has some limitations. For example, it does not employ distributors/wholesalers that are main actors in food distribution in developing economies like Tanzania. Furthermore, distributors of imported food were not included in the study, although they play a major role in the development of modern food retail in Tanzania. I would therefore like to suggest that future research include distributors/wholesalers of local and imported food products.DANID

Relationship Establishment in SCM in a Market with Enforcement and Regulation Challenges:Case of Tanzania

In absence of effective state institutions, informal and private sector operations tend to govern the market. This problem is evident in the petroleum industry in Tanzania. However, little is known about how players in petroleum industry operate in those business environments. The purpose of this chapter is to explore establishment of a relationship between supplier-logistic firms in a post planned economy. The study employed case study interview with two petroleum products distributors in Tanzania to achieve its objective. Data were analyzed by thematic analytical techniques. Three major findings regarding buyer-suppliers relationships in developing economies are presented: actors do not prefer to enforce contract that they sign, discretional relationships exist in petroleum business among actors and ‘undugunization’ is the strongest criteria in selection of actors. Study implies that for a supplier-logistic relationship to exist government has a great role to play in enforcement of laws

Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya

In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed

Building Commitment in Supplier–Retailer Relationship in Developing Economies: The Case of Tanzania

This article investigates the establishment of commitment in developing economies between suppliers and retailers. Previous studies in supplier–retailer commitment relationship used data only from one side. Furthermore, knowledge of institutions governing relational exchanges was limited. Network relationship theory and cross-case analysis of sixteen cases that comprised retailers and suppliers were used. The study shows that affective and behavioural commitments are important in understanding the level of relationship between retailers and suppliers in Tanzania. Implications of the study and areas for further research were provided

Factors limiting the flow of food innovation ideas from modern food retailers to local food suppliers in Tanzania

This paper explores factors that constrain the flow of innovation ideas among downstream actors in the food value chain in Tanzania. Prior focus was on the improvement of products, but the influence of downstream actors has received little attention from the researchers in Africa. Qualitative method was deemed to be adequate and advantageous because the study was on understanding the challenges of innovation flow among downstream actors in the food value chain in Tanzania. Food suppliers were selected from international or local retailers using contact information of the processers provided on the packaging. The empirical findings of this study indicate that trade credit, government requirements, counterfeit products, consumers’ preference and lack of skilled staff limit the flow of innovation in the food value chain in Tanzania

Integrating Local Food Suppliers in Modern Food Retail in Africa: The Case of Tanzania

This study addresses three distinct but interrelated issues in the integration of local food suppliers in modern food distribution in Tanzania. These issues are: What are key factors driving the development of modern food retailing in Tanzania? What factors influence the participation of local modern food suppliers in the industry? And, finally: What policies and strategies can be adopted to increase local suppliers‘ participation in the industry? The study used a critical realism case study approach, in which nine local food suppliers and seven modern food retailers participated. Participants from two food regulators and two private sector support organisations were also interviewed. Data were collected in four regions of Tanzania: Dar es Salaam, Arusha, Kilimanjaro and Morogoro. Interviews were conducted in English and Swahili, and voice recorder and field notebooks were used in data collection. Secondary data were also used for the study and were collected from government reports, newspapers and magazines. Data were stored in Nvivo but were primarily analysed manually. A thematic analytical technique was used for qualitative data analysis. Furthermore, both within-case and cross-case study data analyses were employed for data analysis in the study. This study produced three findings: First, the study shows that the evolution of modern food retail distribution in Tanzania was accelerated by both internal and external factors. External factors are the availability of suppliers, the acceptance of trade credit and return policies by local food suppliers, administrative reason, change in lifestyle, the rise of the middle class, and institutional supports. Internal factors are innovation, quality, the availability of products, safety and return policies. Second, the study shows that the participation of local food suppliers is very low, but is increasing. Findings show that the selection of local food suppliers is influenced by satisfying government requirements, food quality, consumer feedback, packaging, reliability, acceptance of return policies and trade credit, price and adherence to Islamic practices. The study shows that a number of factors influence the establishment of the supplier-retailer relationship. These are: the acceptance of trade credit, return policies and premises visitations. Furthermore, the study shows that territory relationship and social embeddedness influence the formation of relationships between retailers and suppliers. In spite of this, the supplier-retailer relationship study shows that there is a lack of trust and commitment among actors. The study shows that payment delays limit supplierretailer relationships. Finally, the study shows that, in order to increase the participation of local food suppliers in modern food distribution in Tanzania, local food suppliers use different strategies. These strategies are the formation of networks, innovation, outsourcing and the recruitment of ix experienced staff. To increase their chances of participation, local food suppliers embarked on innovation, and the study shows that major sources of innovation are distributors, retailers and government agencies. However, the flow of information to stimulate innovation from downstream actors is limited by trade credit, consumer preferences and government requirements. The study contributes to theoretical and empirical knowledge. The study presents a new look at the formation of the supplier-retailer relationship from the perspective of developing economies in four stages. These stages include: (1) retailer evaluation of suppliers‘ reputation, (2) supplying of samples (3) supply commencing after terms are negotiated and agree upon, (4) consumer/institution recommendation and finally (5) a sustained relationship. The study also proposes a framework for understanding the evolution of modern food distribution in developing economies, with a focus on internal and external factors. In general, previous proposed theories marginalised the influence of external factors on the evolution of retail formats, which seem to be very important in Tanzania. One policy implication study suggested the formation of special financial supports for local food suppliers to help them meet their working capital when engaged in trade credit with retailers by commercial banks in Tanzania. These loan could be granted against invoice based on supply to the retailers who buying on credit. In spite of these contributions, the study has some limitations. For example, it does not employ distributors/wholesalers that are main actors in food distribution in developing economies like Tanzania. Furthermore, distributors of imported food were not included in the study, although they play a major role in the development of modern food retail in Tanzania. I would therefore like to suggest that future research include distributors/wholesalers of local and imported food products.DANID

Consumers’ Reaction towards Involvement of Large Retailers in Selling Fair-Trade Coffee: The Case of the United Kingdom

Since 2002, the year the concept of own label on fair trade products was introduced in the United Kingdom, grievances have started to come out. The Fairtrade Labelling Organisation (FLO) has continued to be criticised in the commercialisation movement for giving large retailers (LRs) licences to use Fairtrade mark to produce and sell on their own brands. Earlier, the products were produced by alternative trading organisations (ATOs). To reach mass markets, fair trade products need LRs distribution channels and not the old system of using speciality shops as distribution channels, any more. However, the challenge has always been on the use of own label and the willingness of the large retailers to implement the fair trade guiding principles for the benefit of small producers in the South. The purpose of this study is to explore UK coffee consumers’ reactions to the involvement of large retailers in selling fair trade coffee. The analytical techniques used to analyse the data collected in June 2010 in the high street of Newcastle through face to face interviews include: (1) Factor analysis conducted with a sample of 219 coffee consumers- so as to understand factors influencing purchase decision and, (2) Cluster analysis employed to identify customers’ reaction to large retailers’ involvement in selling fair trade coffee. The study indicates that credence processing attributes such as ‘retailers image’, ‘fair deal’, ‘fair trade promotion’, ‘social responsibility’ and ‘against own label’ are the major factors that influence consumers’ intention to purchase fair trade coffee in the United Kingdom. Two clusters have been identified. Cluster one is the male ‘ethical consumers’ group influenced by retailers’ image and social responsibilities activities. This group was found to be in favour of the idea of having large retailers using their own label. Cluster two is female ‘ethical and well being’ consumers group. This group is not in favour of allowing large retailers to use their own label for fair trade coffee. The interesting finding here is that, this group is not against the involvement of large retailers in selling fair trade coffee. Studies have shown that consumers are not in favour of own brand issued to large retailers, but they are willing fair trade products stocked in supermarkets. This alarmed the Fairtrade Labelling Organisation (FLO) to review its policy of allowing the large retailers (LRs) to use own brand. The findings of the study need to be interpreted with caution because of two major reasons. The first reason has to do with the sample size used: The size of coffee consumers in the UK is very small. The second reason is the fact that the study is based on the evaluation of hypothetical attributes of coffee and any additional factors, and this may affect coffee purchase