183. Food Retailing in Zambia.Docx

Invited paper presented at the 6th African Conference of Agricultural Economists, September 23-26, 2019, Abuja, Nigeria Copyright 2019 by [authors]. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Modernization of African food retailing and (un)healthy food consumption: Insights from Zambia Makaiko G. Khonjea*and Matin Qaima a Department of Agricultural Economics and Rural Development, Research Training Group ‘‘GlobalFood,’’ University of Goettingen, 37073, Goettingen, Germany * Corresponding author. Tel.: +4915217034785. E-mail address: [email protected] (M.Khonje) Modernization of African food retailing and (un)healthy food consumption: Insights from Zambia Abstract Food retail modernization continues to evolve rapidly; influencing consumer’s dietary choices and nutrition transition in developing countries. However, empirical evidence analyzing the linkage between retail modernization and people’s diets is still scanty. A few existing studies have focused exclusively on single modern retailers like supermarkets, and empirically they have neglected the fact that most people buy their food from different retail outlets. Using cross-sectional household survey data collected in urban Zambia, applying multivariate probit and tobit regressions, we analyze the associations between household socioeconomic status, the use of different types of modern and traditional retailers, and dietary patterns. Our results show that the use of different retail outlets is strongly associated with various household socioeconomic characteristics such as education and income. Several complementary and substitution correlations exist among retailers. We further find that the use of modern retailers is associated with a significantly higher consumption of ultra-processed foods at the expense of unprocessed foods. Interestingly, however, the same holds true for some of the traditional retailers. Hence, the findings suggest that simplistic statements about whether modern retailers improve or worsen household diets are not possible; more nuance is required. Keywords: Retail modernization; food consumption; dietary patterns; nutrition transition; multivariate probit/tobit regressions. 1. Introduction Food environments in developing countries have been evolving rapidly for the last few decades, partly as a response to urbanization, income growth, and changing consumer preferences (Andersson et al. 2015; Qaim 2017; Lu and Reardon 2018). However, consumer preferences and demand may also be influenced by structural changes in food supply chains. For example, the modernization of food retailing—with an ongoing shift from traditional markets to modern supermarkets, hypermarkets, and fast-food restaurants—has effects on the types of food offered, as well as on food variety, food prices, and shopping atmosphere, all of which may influence consumer choices (Asfaw 2008; Hawkes 2008; Reardon and Timmer 2014). Understanding the links between changing retail environments and food consumption patterns is important to promote food security and healthy diets. This is especially relevant in Africa, where poverty and undernutrition are still widespread but where overweight and obesity are also on the rise (IFPRI 2017). Available research suggests that the modernization of food retailing may make calories more affordable for urban consumers but—at the same time—may foster the nutrition transition towards more highly processed foods that are rich in fat and sugar, but contain low amounts of micronutrients for healthy nutrition (Gómez and Ricketts 2013; Umberger et al. 2015; Popkin and Reardon 2018). Recent studies with data from Africa show that the growth of supermarkets contributes to increased consumption of processed foods and a higher body mass index (BMI), also after controlling for living standard (Kimenju et al. 2015; Rischke et al. 2015; Demmler et al. 2018). However, the existing research has several shortcomings. First, many of the studies analyzing the effects of a modernizing retail sector compare food consumption and nutrition between users and non-users of supermarkets. While this approach provides interesting insights, it neglects the fact that most people do not buy all of their food in one retail outlet. Supermarket users may also use traditional retailers for some of the food purchases (Berger and van Helvoirt 2018; Lu and Reardon 2018). Conversely, supermarket non-users may frequently use fast-food restaurants or other types of modern retailers. Hence, focusing only on the differences between users and non-users of supermarkets may potentially provide an incomplete picture of the wider links between food retailing and dietary choices. Second, most available studies look at average effects of supermarkets on the entire sample of consumers without considering that different population segments may use different types of retailers to varying degrees. Third, available studies typically analyze diets and consumption patterns by differentiating between food groups but without properly accounting for the level of food processing. Standard food consumption surveys in developing countries often capture highly processed foods only in very aggregate form, because highly processed foods were traditionally not widely consumed in poorer population segments. However, this is changing with the modernization of the retail sector (Tschirley et al. 2015), implying that survey formats need to be adapted too. Here, we address these shortcomings with more detailed data and statistical analysis. Using primary survey data from urban areas in Zambia in Southern Africa and different econometric techniques, we analyze the associations between household socioeconomic status, the use of different types of modern and traditional retailers, and dietary patterns in terms of processing levels and food groups. To our knowledge, this is the first study that looks into such issues with detailed data from Africa. Zambia is an interesting empirical setting for this analysis, because it has recently experienced rapid growth of supermarkets, hypermarkets, and other modern retailers, especially in metropolitan areas (Tschirley et al. 2015). Moreover, Zambia is experiencing a triple burden of malnutrition, where undernutrition and micronutrient malnutrition coexist with rapidly rising overweight and obesity (Steyn and Mchiza 2014). Hence, our results may help to project how diets evolve with further changes in retail environments and what type of policy responses might be useful. We expect that the insights from Zambia can be useful also for other countries in Africa, where the modernization of the food retail sector is still at earlier stages. This paper is organized as follows. Section 2 provides a description on modernization of food retail environment in Zambia. Methodology—i.e., (i) data sources, (ii) measurement of key variables, and (iii) empirical strategy—and the results are presented in sections 3 and 4, respectively. While the last section (5) draws conclusion. 2. Modernization of food retail environment in Zambia For the past two decades, there has been a rapid growth in the retail modernization process as well as the economic growth of most countries in southern Africa; due to several factors such as technological innovations, globalization, foreign direct investments and regional integration (Tschirley et al. 2015; Ziba and Phiri, 2017). Currently, Zambia is one of the southern African countries with rapid growth in modern retailers (MR) such as superstores1, supermarkets and fast- food restaurants (FF) (Ziba and Phiri, 2017). For instance, between 1995 and 2018, the number of major shopping malls with MR rose from one to 25 (see Table A1 of the appendix) in Lusaka city. Consequently, a substantial share (42%) of the food consumed by urban households in Lusaka city is bought from MR—mostly from South Africa. The common feature of these MR is that they are mainly concentrated in the major shopping malls of main cities, urban towns and districts. On average, a shopping mall has at least a supermarket (e.g., Food Lover’s market, PicknPay, Shoprite and Spurs) or superstore (e.g., Choppies and Game stores), and three FF (e.g., Debonairs Pizza, Hungry Lion and KFC) in Lusaka, Zambia (see Tables 1 and A1 of the appendix for details). Most of these retail outlets operate from a shopping mall with a floor space of 100–200 m2 or more. Customers normally use self-service facilities with several modern cash tills (4–15) and limited credit facilities (Table 1). In addition to shopping malls, some of the FF such as Debonairs Pizza have several outlets in filling or gas stations. Furthermore, to maximize sales and profits, most MR offer occasional (i.e., month ends 1 We interchangeably use superstore and hypermarket as well as food retailer and food retail outlet in this paper. and the Christmas season) price discounts to customers by advertising in both electronic and print media (Table 1). [Insert Table 1] Unlike MR, most traditional retailers (TR) such as traditional markets, grocery stores, roadside markets and neighborhood kiosks operate from self-constructed shelters with limited floor space (e.g., 1–10 m2) and they hardly use cash tills (Table 1). However, customers may negotiate for price reductions as well as buying food items on credit. Furthermore, most TR also keep special traditional food items such as indigenous vegetables or fruits,

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