I would like to commend the major retailers for joining the #PushaBW bandwagon and acceding to the clarion by BITC and other stakeholders to buy local products. Let me also appreciate the sterling job that has been done by major retailers like Choppies and Sefalana to transform the economy of Botswana away from domination by South African chain stores. There is a lot that Batswana can learn from these powerhouses, as they have shown that all things are possible if you start small but think big.
The #PushaBW Initiative, which is aimed at promoting the sale of locally made products, is a noble cause that was probably initiated with good intentions. However, not all that glitters is gold. The retail sector is a war zone that usually adopts two main strategies to gain competitive advantage. These are either differentiation or cost leadership. The differentiated market is made of sellers who offer differentiated products with attributes that are highly valued by certain market segments, usually willing to pay a premium price for the perceived unique product. A fitting example is Woolworths foods. On the other hand, the cost leadership market is a price sensitive market that is dominated by sellers who are able to minimise costs across their value chain so they can squeeze margins through mass sales emanating from low prices.
One could liken this approach to the “containment” strategy adopted by America and its allies during the cold war against the Soviet Union. The cold war was a battle to exercise supremacy and control over the world by all means necessary. Currently the war has been reignited by NATO through American influence, under the guise that they are offering Ukraine freedom and protection from Russia. This time America is using Sun Tzu’s Art of Cold War tactic of trying to win without fighting. The rest of the developing world is left with an imposed choice between the two sides.
On paper the West is more popular because it is portrayed by western media as protecting a sovereign country from oppression. This is the same story that was sold to the Iraqis and the Libyans, to mention a few. However, one school of thought believes this is a hidden battle for control of World Commodity markets by NATO allies against BRICS countries using Ukraine as the battle ground. The control of commodities reinforces the supremacy of the Euro and Dollar. Russia knows that the West is not to be undermined when it comes to the scramble for power. It is no secret that most of the eastern economies like China secretly loathe the global dollar dictatorship, which only Russia has found courage to protest.
In Botswana’s case the battle for FMCG supremacy is between major retailers being Sefalana and Choppies. These are the major cost leaders and the SMMEs are used as the battleground. It would look like a noble cause as these super retailers presumably protect small businesses by offering them shelf space. But the reality is that the big guys are “containing” the small man. The containment strategy adopted by the super retailers enables direct control of commodity prices of small businesses. In the long run, the growth of small businesses will be stagnated with the big retailers’ in-house substitute products (reserves). I urge anyone to visit any of the retailers and compare the prices of the substitute products made by SMMEs with those of the retailers’ in-house brands. The difference ranges somewhere between P2 to P10 or more. The in-house brands are advertised in bigger letters and strategically positioned, giving them an obvious competitive advantage in a price sensitive market.
This is evidence that the probability of sustainable growth by SMMEs in this manipulative arrangement is near impossible. The SMMEs products will instead be used as bait to fish the desperate consumers into a red ocean of a cold retail war. In their defence the super retailers would justify their cold war tactics by saying this is a free market economy. They would say it’s all legal, just like the poor wages they get away with. Innocent consumers in their Iscariot defence unknowingly crucify the SMME’s chances of survival for a few pieces of silver with the excuse that “they are cheaper.” They are not aware that they are advancing the super retailers’ atomic rule. However, there are some democratically considerate FMCG retailers like Square Mart and Save Rite which seem to be giving a fair chance to the small man to grow sales in their distribution network without competing with them unfairly.
Conservatives would think regulators should instead “contain” the major retailers’ monopolistic economies just like they have been controlling foreign imports of agro products. The consumer watchdog could be expected to limit the bargaining power of the super retailers dominating every sector and square metre of shops by becoming the consumer police to control traffic of this one-way competition. On the other hand, one would argue this approach to be futile saying even the consumer police are subject to external influence in their administration of justice. After all law enforcers get orders from crooked politicians who share the alliance plate with the super retailers. Then we could suggest that SMMEs could shift their defence to the force of bargaining power of consumers and rally them to succumb the opportunity cost of “it’s cheaper” mentality in the short run for the “let me grow the small man” paradigm. If the Tswana forefathers were able to forego their cattle to build big institutions, then what is preventing the SMMEs and consumers from sacrificing for a bigger picture? Consumers will have to forego their taste and preference of international products where there is an equally good substitute. Before we get there, the small man needs to also start by putting their dirty house in order if they are to stand any chance for growth.
SMMEs should learn to price consciously and not emotionally, market effectively, differentiate themselves, provide reasonable quality and collaborate to defend the growth of their small market. Moreover, SMMEs should stop being content with battling for survival on breadcrumbs from super retailers. They should instead battle for sustainability and growth with or without the support of chain stores and government. Perhaps this could be done by bringing back cooperatives in the form of what I would like to term co-opetitors (collaborative competitors) which are ran by capable and diverse SMMEs with pure win-win business motives like BRICS, not the olden political mileage of containment by biased agendas. In isolation the cold war is almost impossible to win like the current Russian roulette, but joint support from BRICS allies would synergise the probabilities of a successful rubble.
This is the big secret of how the art of cold war by big retailers and their allies were able to divide, conquer and grow like NATO on Russia. I can guarantee that the building material sellers, electronics, car parts or any of the dominating retailers mushrooming in Botswana malls and villages is founded on co-opetitive trust or family alliances with ties to the same big players posing as independent sellers to grow each other.
On the other hand, the isolated small man should take this downside as motivation to also innovate their sales and distribution like Russian oil through the popular network marketing approach used in Forever Living Avons to grow their niche big enough to stand the superman. This could be by incentivising the customer for honest support, using constructive feedback, soliciting recommendation at household and communal level rather than depending solely on abject government tenders. Incentives like SMME combos for complementary products, marketing to Metshelo, loyalty discounts and commission-based sales could go a long way to create customer awareness of products to mention a few.
If this so called legal Sun Tzu Art of Cold War tactic by big retailers is left unchecked, it will leave the national commodity market in the hands of very few monopolistic players with immeasurable power that can erroneously threaten the mass destruction of Botswana’s economy in the long run when their demands are not met. Empowering SMMEs to grow fairly, re-engineering the bargaining power of buyers in households and localising network marketing could mitigate the ripple effects. Lastly, establishment of collaborative competitors, and innovative production ecosystems could be the few urgent ways needed to disarm this economic atomic bomb being built by major retail moguls in Botswana.
Aobakwe Motang is a Business Management & Entrepreneurship Lecturer Botswana Accountancy College (BAC)