The distribution network in Tanzania

Evolution of the Sector: In Tanzania, nearly all goods are distributed through wholesalers and retailers. Tanzania lacks a formal retail shopping culture and it is estimated that up to 90% of food sales occur through traditional small stores, street vendors and unregulated markets. Since the 1990s there has been some growth in formal wholesale and retail of food in major towns and cities where supermarkets tend to serve largely expatriate and middle-class communities, often with a range of products imported from Kenya, Dubai, India and Europe. Wholesalers import goods in bulk from the manufacturers or other wholesalers abroad, transport the goods to bonded warehouses, and later distribute them to retailers in the local market. Retailers purchase the goods, pay the required duties, and sell in small shops, usually specializing in one type of product. Some wholesalers, usually operators of supermarket chains and shopping malls, run both wholesale and retail operations.
Market share: Compared to neighbouring Kenya, modern trade is less developed in Tanzania. At Dar es Salaam’s bustling Kariakoo market, hundreds of traders sell everything from food to fashion. Informal shops tend to be cheaper than supermarkets since they do not charge VAT and may even sell smuggled goods. Locals also find it frustrating to travel long distances to formal grocers. Despite Tanzania’s larger population, the retail market is also smaller than Kenya’s. Total retail format sales in 2014 were $17.8bn, compared to $25.8bn in Kenya.
Kenyan supermarket chain Nakumatt is active in Tanzania, with five stores. A number of other foreign brands such as Game (South Africa), Mr Price (South Africa) and Baby Shop (Bahrain) also have a limited presence. However, not everyone has found success in the Tanzanian market. In 2012, Kenyan retailer Deacons pulled out of the country citing expensive rentals, long supply chain lead times, a small upper-middle class and the generally high cost of doing business as the major reasons for its exit.
South African chain Shoprite also sold its three outlets to Nakumatt, describing its operations in Tanzania as unprofitable.
Retail Sector Organisations: Ministry of Industry, Trade and Investment

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