Integrating Local Food Suppliers in Modern Food Retail in Africa: The Case of Tanzania
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Date
2016
Authors
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Publisher
Aalborg University
Abstract
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
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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.
Description
Keywords
Retailers, Integration, Tanzania, Local Food Suppliers
Citation
Nandonde, F. A. (2016). Integrating of local food suppliers in modern food retail in Africa: The case of Tanzania, Unpublished Doctoral Dissertation, Submitted at Aalborg University