The New Face of Retail Trade

Customers rushing in and out loading their cart with products they have picked from the shelf of Shoa Supermarket, Bole Branch.

Addis Abeba, the capital of Ethiopia, is witnessing a change in shopping culture. At the heart of it all lie the booming supermarkets. The culture of shopping from supermarkets is rising even if it is still small compared to the total size of retail trade in the country. A lot has to happen yet for Addis to witness a prevailing modern day shopping.

Walking down the streets of Addis, one is bound to see supermarkets, even if they may be few and far between. Regardless, this is a big change since the early days of Bambis. Presently, already established chains are expanding while new ones are joining the market.

In 1931, a twenty year old Greek youngster named Charalambos Tsimas, a.k.a Bambis, arrived in Ethiopia after finishing college as per his uncle’s request. His uncle and other relatives were a well-established family in Ethiopia since 1884.

Following his arrival, Bambis worked with his uncle for five and half years in the grocery business, which ended in the two splitting apart as a result of irreconcilable differences. This exposed him to the worst of his life until he was able to start up his own business and become the pioneer of supermarket business in Ethiopia.

“After I got out of my uncle’s business, I had gone through various hardships; I did not have a penny in my pocket so I had to go around and stay with my close friends. But in 1958, I browed 20,000 Br, which was a lot of money considering the time and established my own grocery store on 40sqm at Senga Tera.”

After two years, Bambis bought 2,000sqm of land and established Bambis Supermarket, named after himself. Nearly no one used to live there; they were among the first settlers in the place surrounded by trees, reminisces Bambis.

And who were the customers, then?

Back then, supermarkets were usually visited by foreigners that resided in Ethiopia and government’s civil servants, according to Mohammed Hasin, 70, one of the first employees of Shoa Supermarket, another early entrant into the same business.

But this trend is changing as more Ethiopians become accustomed to the habit of shopping at supermarkets. Yet, this is insignificant change as the trade that exists in supermarkets accounts for 0.5pc of the total retail trade in Ethiopia, according to a research titled “Grocery Retail in Ethiopia (Addis Abeba)” conducted by a French based consulting firm, Sagaci Research, in August, 2013.

In 2013, only 15 modern stores could be identified as supermarkets, which means a store that rests on 1,000sqm of land or, if it is smaller, it has to be part of a chain with more than four stores, according to Julien Gracier, managing director of Sagaci Research.

The lack of standardization in the business allowed the emergence of many so called “supermarkets” that contains small variety of item within small confined space, Gracier says.

In 2013, there were a total number of 323 supermarkets and hypermarkets that engage in the business, according to Addis Abeba Trade & Industry Bureau (AATIB). This number now has reached 764. Bole District has the largest number of modern supermarkets having 201, while Lideta Distict has 21, which is the least among all districts.

There are still a lot of Ethiopians who avoid supermarkets because of fear of higher prices relative to the open market; the neat organisation and big building also intimidates them, says Shifa Mohammed, manager of Shoa Supermarket main office. But, what they do not give credit for is supermarkets are a one stop sale point where you can come with your grocery list and only have to pick it up from shelves without a need for crossing one part of the city to another part of the city searching for the items you want to buy, he added.

Starting from food items to vegetables, from consumption goods, such as sugar, bread, edible oil to furniture a, variety of items can be found in supermarkets. Various grains such as Teff, pharmaceuticals and shoe wear can also be found in foot Hypermarket which is located at Megnagna. A hypermarket is like a superstore combining a supermarket and a department store. It is unreserved retail facility carrying a wide range of products under one roof.

Currently, supermarkets heavily rely on imported items, whereas they source vegetables from different irrigation farms or the local vegetable markets. This is a great advantage to minimize price for them as well as their customers, stated Mesfin Mare, supervisor of Fantu Supermarket Bole Branch. The supermarket was established around 30 years ago and now has one additional branch in Sar Bet. Bambis says his business directly deals with manufacturers and being an exclusive supplier of their items.

Going back 50 years from now, items such as household and furniture were not to be found near supermarkets, rather supermarkets were famous for the provision of food items, stated Mesfin. For example, if you go back in time to 1965 and visit a small shop at Piazza, near present day Ethio-Ceramic, you would have found it was filled with items such as milk, sugar and personal hygiene products.

The goods were bought from the biggest importer at the time, Arabian Trading, and vegetables were brought from Atikilt Tera, explains Shoa Supermarket’s Mohammed, who has been there from the beginning.

That small shop, which gave birth to the modern Shoa Shopping Center was established by Haji Biseir Ahemed. They joined the market in a bid to beat the then famous Indian and Arab retailers, Mohammed remembered. Unfortunately, the shop did not stay much longer in business as the Dergue regime, which stayed in power in Ethiopia between 1974 and 1991, found it worthy of confiscation. Bambis also had to lose his supermarket and leave the country, returning later to have it restored back to him by the new regime in 2000.

As for Shoa, following the confiscation, they moved to a new shop that is located near Noor (Benni) Mosque. But it was for the better because that had enabled them to expand their foothold and sell items in a bigger shop, stated Mohammed. Since then Shoa has come a long way and opened six more branches in CMC, Megenagna, Sarbet, Torhayiloch, Piassa, and Bole, stated Shifa Mohammed, the manager, each supermarket having an initial capital of one million Birr.

Same as Shoa, Abadir Supermarket was originally a small shop that is located at Arat Kilo, in front of Addis Abeba University College of Natural & Computational Sciences. It was established in 1972 by Beshir Bushera Omar and his wife Asemame Temame Hasen. The company’s capital is growing and has reached 30 million Br from the 1.2 million Br capital it had eight years ago.

During the old times, the store was busy fulfilling the university community’s high food demand. Abadir Supermarket now has two additional branches which are located at CMC and Gurd Shola, areas chosen by number of population and purchasing power.

This outlet expansion is expected to continue by existing businesses or new entrants and the number of supermarkets can reach 35 by 2018, according to Gracier. This would increase the percentage of supermarket retail trade to two percent of the total retail trade in Ethiopia, he added.

The growing number of middle income class and its changing consumption pattern is what lures modern retailers business, according to Sagaci’s research. Out of the total population of Ethiopia 21.5pc are middle class with 3.1pc growing potential, according to African Development Bank (AfDB). The 2013 Sagaci’s research claims 24pc of households in Addis Abeba earns a monthly income of 500 dollars.

However, the current legislation and the impossibility of foreign players to invest in the retail industry can be a great constraint to supermarket establishment and expansion, the French researchers think.

“Several foreign players would be ready to get into Ethiopia and develop stores but it is not allowed as of today,” Gracier says.

The complexity of importing products is also another challenge Gracier mentioned.


Published on February 24, 2015 [ Vol 15 ,No 773]



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