Supermarkets, Beyond the Hype




Addis Abeba is home to 3.4 million residents. Its rapid urbanisation and growth in disposable incomes have meant changes in food preferences and eating habits among urban consumers. Hence, the increasing patronage of supermarkets and convenience stores. It is good news as it creates jobs in the area and who would mind the comfort of having a supermarket nearby. But, the naming of these stores as supermarkets and recently hypermarkets is spurring controversies in Ethiopia's retail market. William Shakespeare once said,


Living in Ethiopia for four decades, Rolf Gautschi, general manager of Orbis Trading & Technical Centre, has seen numerous economic changes and reforms since he travelled from Germany for work during the imperial regime.

Such economic transformation was also witnessed in the retail market, but for Rolf, it has been a bumpy ride.

“No doubt, the supermarkets are growing in size and number, albeit in the wrong direction,” said Gautschi.

Living with his wife and a daughter, he usually faces challenges while buying food and non-food items from supermarkets and the recently opened hypermarkets. He often shops at Shoa Hypermarket and rarely visits Bambis and Safeway.

“They are not super or hyper as their names suggest,” said Gautschi, who wanted to buy coconut butter at Shoa Supermarket but to his disappointment could not find any. He expected these outlets to have a stock of such products.

Over the past decade, mini markets, supermarkets and very recently hypermarkets have proliferated in the country. Likewise, the number of kiosks has also grown steadily.

Home to 3.4 million residents- half a million higher than a decade ago- and an economy rising by 14pc yearly, Addis Abeba contributes to half of the national gross domestic product (GDP).

With the rapid growth in economy, urbanisation and population, retail markets have equally seen a significant increase with the opening of eight major supermarket and two hypermarket chains across the city’s major areas.

Over the past decade, mini markets, supermarkets and very recently hypermarkets have proliferated in the country. Likewise, the number of kiosks has also grown steadily.



While for Kelifa Mekasha, Supervisor at Shoa Supermarket, economic growth means more disposable income for people to buy from supermarkets and hypermarkets.

“The economic growth has brought much change in people’s lives,” he said. “Thus, households are now willing to use modern retail outlets.”

He believes the pricing strategy of the company he is working for has helped it attract more customers encouraging them to buy from modern retail stores such as supermarkets.

“Low and competitive pricing help us provide affordable goods and services while also giving customers plenty of choices,” said Khalifa, who has worked at Shoa for seven years.

In the capital, supermarkets and hypermarkets have a considerable role in the business, and are becoming indispensable for many urbanites. As far as Gautschi is concerned these outlets do not live up to their names.

“Instead of producing items locally, they tend to use business as usual approaches- depending on imported products,” he said. “Hence, they lack originality.”

Shoa is the pioneer to join Ethiopia’s modern retail business as a chain supermarket in the imperial regime, closed during the Dergue period and resumed operations after the introduction of the mixed economy.

Since then, Fantu, Safeway, Friendship, Bambis, All-Mart, Novis, and Loyal have followed, pushing the number of supermarkets to over 30, adding to mini-markets across the capital, while other urban areas in the country are yet to get a taste of supermarket and hypermarket chains.

A classification of the World Bank (WB) defines hypermarkets as large stores, covering more than 1,000sqm, that sells products found in department stores and supermarkets.



Despite the increase in some modern retail outlets, research undertaken by various entities, including United Nation’s Food & Agricultural Organisation (FAO), indicate that the city’s modern retail business is in its infancy and has a long way to reach the level observed in other parts of the world.

Customers are devoid of the one-stop shopping experience that may reduce their search costs significantly, according to a study undertaken by Ethiopian Development Research Institute two years ago.

Neighbouring Kenya, which has a similar economy size to Ethiopia, has an advanced retail market with seven major supermarket chains and over 300 stores across the nation, over half of which are in Nairobi- whose population is half a million lower than Addis.

Major supermarkets in Addis mainly sell imported packaged and processed products such as rice, powdered milk, jam, pasta, cereals; a major contributor for the soaring import bills of the nation which stood at 17 billion dollars last fiscal year.

The same trend holds true for dozens of non-food items such as furniture, TVs as well as stationery materials, whereas meat, yoghurt, spices, grains and vegetables are sourced locally.

For a supervisor working at Fantu Supermarket- a renowned player in the retail market since the mid-1990s, the supermarkets’ dependency on imported goods is not an issue as long as customers get a variety of products to choose from.

“As long as there are options, customers will come,” said the supervisor, whose major customers are diplomats, non-nationals, high-income earners, and the middle-income earners.

Additionally, the lack of standards to regulate such businesses is a concerning issue that needs attention, as industry insiders suggest.

“Not everyone should be given a chance to claim itself a hypermarket or supermarket,’’ said Nur Umer, a marketing expert with 12 years of experience.

Until now, the Addis Abeba Trade & Industry Bureau has registered over 843 supermarkets and 50 hypermarkets across the country, despite the absence of standards to certify the business.

“Their services must be evaluated according to the global standards to be identified as a super or hypermarket,” said Nur.

A classification of the World Bank (WB) defines hypermarkets as large stores, covering more than 1,000sqm, that sells products found in department stores and supermarkets.

And, the latter, having a size between 500sqm and 1,000sqm, retails household materials and has a broader selection than groceries but lower than hypermarkets.

“We are undertaking a study to set a standard for certifying and regulating the modern retail market,” said Hagos Araya, head of Licensing Division at the city’s Trade & Industry Bureau.

In spite of the controversies, new players are joining the untapped market and seizing opportunities, including Gara Mart, which officially started operations three months ago. Founded by Salvo Garrino, the supermarket sells various imported as well as locally sourced items.

“Although we believe a regulation should be put in place, I think we qualify as a supermarket based on our own standards,” Salvator Maina, general manager of the Supermarket, claims.

UPDATE: This story has been edited from its original copy published on July 9, 2018. We apologise for the inconvenience the mistakes corrected above might have caused.

By YIBELTAL GEBREGZIABER
FORTUNE STAFF WRITER





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