| dc.description.abstract | Competition and efficiency of food retailing
to the low income consumers in Nairobi was studied.
The ·study concentrated on structural aspects that
affect efficiency of food retailing. Consumer
buying and expenditure behaviour and patterns were
studied. The role of the Central and Local
government in the development and operation of food
retailing was described. Tentative recommendations
of the improvement needed in the food retailing system
were made.
The study was based on primary and secondary
data. Primary data was collected using two structured
questionnaires to interview food retailers. Non
questionnaire interviews were conducted with the
staff of Nairobi City Council, and three leading
food processing firms in Nairobi.
The low income areas studied were selected on
the basis of secondary data available from the
Central bureau of Statistics of the Ministry of
Finance and Economic Planning. The consumer study
was also based on data available from the Central
Bureau of Statistics. The low income consumers
were those with household incomes between K. shs. 0
to K. Shs. 699 per month. This income group
constituted approximately 55% of the Nairobi
inhabitants.
"Food Retailing" referred to the selling of
food to consumers for home consumption. The study
included meat products as this aspect was studied
elsewhere.
The study showed the consumer purchasing
patterns and behaviour were determined mainly by
the locational convenience of food retail outlets,
a wide variety.of food items, credit facilities
provided by the retail outlets and the quality-price
aspects of the food items. Thus, consumers preferred
different types of retail outlets for different
reasons. The consumers in the areas studies spent
approximately 40% of their total expenditure on food.
Food had the largest ~hare of the expenditure over other
items like housing, transport, health. The diets of the
low income consumers were predominantly made up of
starchy foods.
The food retailing system in~the low income
.areas was characteristic of a traditional system,
The outlets were atomistic, with low sales volume.
low food variety and low sales area. The businesses
were individually owned by the family. A large
percentage of the businesses were not formalised by
licensing. Many of the retailers operated illegally~
The retailers had a low level of entrepreneurship,
and little formal education. The businesses suffered
from lack of sufficient capital, small individual
retail transactions and food retailing infrastructure,
such as lack of sufficient retail workers.
Competition in food retailing was severe. There
were many retailers, and many types of retail
outlets: Kiosks, Nairobi City Council Markets, Dukas,
Street Stalls and Street Hawkers. The retail outlets
were located within close proximity of each other.
Entry barriers to business were low. There was a
high degree of product similarity from outlet to
outlet. Vertical and horizontal. integration, cooperation
or co-ordination in the food retail trade
were absent. Market information to retailers and
consumers about prices, supply grading and standard
measures, was scanty.
Efficiency of food retailing was relatively low.
Food wastage and spoilage within the system was high.
The marketing and operating costs and net margins
were relatively high. Productivity of labour and
~capital in food retailing was quite variable from
outlet type to another. The productivity was also
relatively low.
The research findings indicated that the low
efficiency was a result of the food retail structure.
The large number of small retail outlets, with no
vertical and horizontal integration, resulted into
atomistic retail structure, and high degree of
duplication of activities. The unco-ordinated
procurement and selling activities, coupled with lack
of storage facilities resulted in high wastage and
spoilage. The high risks of fire, burglary and Nairobi
city Council demolition of food. retail structures in
these areas, and the high perishability of some food
items, compelled the retailers to make excessive
profits. Furthermore, the high risks involved in
food retailing negated capital investment in food
retailing.
It was recommended that the Central and Local
Government authorities should increase their
involvement in food retailing. Areas that needed
attention were the training of food economists and
retailers; providing advisory services and market
information to market participants. Market and
marketing research in food marketing, regarding the
optimal number of outlets, locations and sizes of
retail and wholesale markets, should' be established.
In order for these services to benefit the retailers.
it was recommended that all retailers should be
registered and organised in groups. This.would
rationalise and centralise purchasing, transporting
and storing food. Large quantity purchase would
be achieved, avoiding duplication of activities.
Group organisation should attract the capital and
the management required in these businesses . It
was suggested that food retailing should develop
along the lines of the Nairobi City Council Markets
with individuals renting stalls. Public and
private. markets of this type should be encouraged.
The development of this type of system would be
consistent with the Government policy of increased
employment and equitable income distribution, and
yet introducing modernity and efficiency in the
food retailing system. | en |
