WWII
Source: http://www.google.co.za/imgres?imgurl=http://i680.photobucket.com/albums/vv164/cbustamante47807/VintageWorldWar2Poster11.jpg&imgrefurl=http://us.ebid.net/for-sale/vintage-world-war-2-just-begun-to-fight-magnet-16690147.htm&usg=__R3cmmQgL3AR6Sy_maY43-AlDi3c=&h=531&w=306&sz=34&hl=en&start=15&tbnid=P-d4swVbNH13cM:&tbnh=112&tbnw=66&prev=/images%3Fq%3Dworld%2Bwar%2B2%2Bsouth%2Bafrica%26um%3D1%26hl%3Den%26rlz%3D1R2RNSN_enZA388%26biw%3D1003%26bih%3D539%26tbs%3Disch:1&um=1&itbs=1&iact=rc&dur=643&ei=5B9hTNSRKs6nOMy-vbAK&oei=wh9hTJTEN8mj4QbKy_zcCQ&esq=2&page=2&ndsp=19&ved=1t:429,r:3,s:15&tx=41&ty=61
Trends influencing how traditional wholesaling is done
• Urbanisation• Decentralisation of commercial
institutions• Improvement of infrastructure• Improvement in communications• Manufacturers and retailers
operating on larger scale and leaving out WS (disintermediation)
• Marketing solution for WS?
The Internet as distribution channel
• Obtain info• Interactive• Multimedia= communications channel,
transaction, distribution channel
Developing country trends
Informal/ street markets
Spaza shops
Western influences – hypermarkets and cash-and-carry retailers
Large-scale self-service group of retailers i.e. OK Bazaars, Pick n Pay, Shoprite
Price Club
How Wholesalers are experiencing competition
1. Self-service/ cash-and-carry i.e. Metro (= actually a large retailer taking role of wholesaler and retailer in one)
2. Forward integration (manufacturer setting up retail sales outlets)
3. Backwards integration (retailer groups creating their own manufacturing facilities)
What Wholesalers in urban areas do
1. They control big cash-and-carry outlets
2. Becomes involved in manufacturing and packing and importing products
3. Their clients now include spaza shops, formal retailers, catering businesses and end consumer
Traditional functions: Physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots to retailers,
industrial-, commercial-, institutional-, and professional users (or even to other wholesalers) … or even act as an agent/ broker in buying and selling
merchandise.
South African Retailers
• About 53 600 independently operated
• R3.5 million sales (may 2005)
• Accounts for 29% of GDP
• Are in direct competition with cash and carry wholesaler
Leading retailers
• Metcash (1544)• Spar (815)• Shoprite (743)• Pick n Pay (594)• Woolworths (221)• Massmart (167)• Uchumi (31)• Casino (24)• Nakumatt (14)• Carrefour (4)
Large retailers
• Hyperama, Shoprite, Checkers, Spar, Pick n Pay
• Account for 63% of food purchases in SA
• Distinction between large retailer and wholesaler is in the process of blurring
Small retailers
• Popularity in an important consumer characteristic
• Limited income, Storage facilities and preference for fresh food create opportunities for small conveniently established retailers supported by a large number of wholesalers.
Wholesalers
• Also known as invisible industry because the final consumer has little contact with it. WS have phases and these are determined by a country’s economic dev level.
• 1st phase- WS have separated functions from those of an importing house, they import, collect raw materials and retail distribution of products.
• 2nd - WS function seperates from retail function.• As WS developed ,along with the economic dev in
the particular country, the WS delegates certain activities to other trading institutions such as the retailer.
• 3rd – there is specialisation of of certain products , integration of WS with manufactures and a development of new types of WS such as CCWS emerge.
The importance of the WS
The role of WS in developing countries• Collect products and raw materials • Builds up contacts and markets• Keep stock, and break up bulk quantitiesCarry the financing burdenThe extent of the influence that the WS has
in the distribution channel is usually an indication of the economic stage of development of the country. Japan is the only developed country where there is still so many WS in the distr.channel
Cash-and-carry WS
• The CCWS markets a limited range of products with a profit turnover and concentrates on a limited range of products in order to get the competitive advantages of buying in bulk.
• Although the rise of the larger retailers reduced the involvement of the wholesaler in the distribution channel, smaller and independent retailers support CCWS.
45yr timeline of the CCWS development in SA
• 1960-1970, there were no CCWS• 1971-1985, the intro of CCWS in
SA. The first one in 1971 was Makro followed by Metro in 1979.Metro grew so rapidly it was in the JSE in the same year.
• 1986-1990, Makro and metro(metro,bingo,trade centre) grew and other CCWS such as shield started to emerge.
Franchising
• Developing businesses• Developing new products• Create new opportunities• Test the market
Key terms and concepts
Franchisor adv.
Franchisor disadv.
Market expansion Maintaining a working relationship with the franchisee (must be super otherwise disaster …)
Monitoring (incentive) Quality control
Economies of scale (i.e. R&D, advertising …)
Threat of competition (when franchise agreement expires)
Risk management (i.e. test new market without risking own company store … sneaky …)
Key terms and concepts
Franchisor adv.
Franchisor disadv.
Market expansion Maintaining a working relationship with the franchisee (must be super otherwise disaster …)
Monitoring cost reduction (incentive)
Quality control
Economies of scale (i.e. R&D, advertising …)
Threat of competition (when franchise agreement expires)
Risk management (i.e. test new market without risking own company store … sneaky …)
Key terms and concepts
Franchisee adv.
Franchisee disadv.
Access to training and support Limited control and flexibility
Access to capital Costs
Leverage Reliability of the franchisor
Exclusivity & independence Erosion of name and reputation
Key terms and concepts
Franchisee adv.
Franchisee disadv.
Access to training and support Limited control and flexibility
Access to capital Costs
Leverage Reliability of the franchisor
Exclusivity (geo) & independence
Erosion of name and reputation
Kauai
In groups of two:
• Study the Kauai franchising model in detail• Critically analyse whether you would buy into
Kauai and mention several reasons why or why not?
• Half to analyse from a franchisee’s point of view how you would adjust the model based on concerns that you might have.
• Half to analyse from Kauai’s point of view how you would adjust the proposed model based on concerns that you might have having to deal with a few franchisee’s now – are there any areas of “best performance” criteria that you would potentially adjust?
• All groups to answer: what franchising option has Kauai chosen – and motivate your answer – refer to page 110 in your text book to assist.
Distribution channel trends in SA
Developing countries
• High population growths• Low economic growth
• Formal sector = saturated• Increase in informal trading
Distribution channel trends in SA
Informal trading
• Credit = problem• Regulation in SA for informal trading …
• Regulation in SA for guys selling to them i.e. wholesalers …
Problem:Retailers becoming
strong … forcingwholesalers out …
A = car port
B = in-house
C = separate
Top Related