Supermarket Chains: More than a One-Stop Shop

By Mwanda Phiri and Francis Ziba

Zambia's economic liberalization in the early 90s provided a gateway for the entry of foreign supermarket chain stores. In 1995, Shoprite pioneered the way into the unsaturated retail space and gained first-mover advantage which led to its dominance.

From thereon, Zambia has seen an increase in the number of chain stores over the last 20 years, largely driven by South African supermarkets. Game stores, Spar and Pick n Pay all followed on the back of Shoprite entering Zambia’s retail market between 2001 and 2010. More recently, a new non-South African player, Choppies from Botswana has also entered the market. By December, 2016, the aforementioned stores collectively had 66 stores in Zambia and over 4,000 direct employees.

This wave of retail modernisation is attributable to a number of factors namely: increased urbanisation; economic growth; emergence of a middle class; changes in food consumption patterns as a result of globalisation, food marketing and advertisements; and more efficient procurement and transportation systems.

For many, supermarkets are perceived as merely a one-stop shop for bread and butter and other consumables. But, the presence of supermarket chain stores should be viewed through a different lens. In addition to providing improved product and service availability, more consumer choice, competitive prices and direct employment; supermarkets provide formal market value chains that can trigger industrial development and the associated knock-on effects on employment creation, economic growth and poverty alleviation.

Envisage the implication for a local processing firm supplying one of the supermarkets in Zambia. The supermarket offers a formal market channel through which the local firm’s products can reach the end consumer. These stores’ advantage is access to a larger and broader customer-base owing to their strategic locations in prime shopping malls and their spread in various towns. For a processing firm, access to this wider market entails demand for higher volumes of goods. This in turn leads to economies of scale as local firms expand their output to meet increasing demand for their products. By accessing and fully integrating into supermarket value chains, local processing firms can be compelled to improve their production capabilities by acquiring and enhancing their technology and production techniques in a bid to meet the quality standards of supermarkets. In so doing, increased industrial production, efficiency, increased output and employment creation, and export and economic growth would ensue. For instance, a study by Emonger and Kirsten (2008) showed that small-scale Zambian farmers who supplied supermarkets experienced positive turnover impacts.

However, the spread of supermarket chains in Zambia raises important questions about local supplier capabilities and their ability to access supermarket value chains. Anecdotal evidence indicates that the majority of the processed foods sold in supermarkets are imported. The limited participation of local suppliers in the supermarket value chain potentially deprives Zambia the opportunity to fully capitalise and harness the potential for industrial development and the multiplier effects of employment creation and economic growth that can be derived from linkages to supermarket value chains.

ZIPAR’s recent study on Regional Supermarket Value Chains finds that the participation of local processing firms in these value chains is constrained by a number of factors which limit the development of supplier capabilities or pose barriers to entry. One major hindrance is access to finance. Others include access to reliable and adequate infrastructure such as electricity and roads. Most firms not supplying supermarkets indicated that the long credit period (45-90 days) imposed by supermarkets for payment of goods supplied is the main prohibition to their participation. These firms also indicated that their output is not sufficient to meet the volumes demanded by supermarkets.

Further, local firms face growing competition from imported products and the private brands of supermarkets. Supermarkets also exert buyer power, impose private standards and apply red tape, which further limits local supply. The study also finds mismatches in information between supermarkets and local processing firms regarding supermarkets’ procurement criteria and firms’ capabilities to produce goods that conform to the quality and packaging standards of supermarkets

Given that manufacturing’s contribution to GDP has remained flat at 9.2% per annum on average over 1994-2014, the integration of local processing firms in supermarket value chains in part, could stimulate industrial development and provide greater market opportunities for manufactured high value goods. What remains however, is for local firms to develop their supplier capabilities and to address the challenges they face.

This in part could be achieved through the provision of affordable finance to local firms to enable them acquire machinery and invest in technological know-how for the manufacture of sufficient volumes of quality, consistent, innovative, competitive and timely well-packaged products. Incentivising supermarkets to have a voluntary code of conduct with local suppliers that provides for sharing of information regarding quality and packaging standards as well as access to supermarkets’ shelves and payment terms should also be encouraged. Introducing a local content policy that allocates a quota of supermarkets’ shelf space to locally manufactured goods with domestic production capacity is imperative. To increase the competitiveness of Zambian products and ease entry into supermarket value chains, it is critical to ensure that domestic quality standards are at par with those in regional markets. Moreover, measures aimed at promoting import substitution for products with local production potential should be enhanced in order to stimulate industrial production. Collectively, these measures could go a long way in promoting industralisation and job creation.

 The authors are researchers at ZIPAR. For details contact: The Executive Director, ZIPAR, corner of John Mbita and Nationalist roads, CSO Annex building, P.O. Box 50782, Lusaka. Telephone: +260 211 252559. Email: This email address is being protected from spambots. You need JavaScript enabled to view it..

Institutional Brief


ZIPAR is a Grant-aided institution under the Ministry of National Development and Planning.

Working towards the fomulation of sound public policies.


2017 Zambia Environmental Management Agency (ZEMA) Award Winner for Environmental Research zema award.fw



 CSO Annex Builing, Cnr John Mbita & Nationalist Roads


 info (@)