Shoprite has been operating in Zambia for almost 20 years – enduring the tough economic times as well as capitalizing on the strong economic growth that has occurred over the last decade or so. The supermarket chain has a network of 21 stores (with the recent opening of a store at Kafubu Mall in Ndola) which is set to expand to 26 by the end of 2015. Anyone who reads the various newspaper publications would have noticed an advert for the inception Shoprite money transfer services in partnership with Stanbic bank. Here is why the brick and mortar money transfer service providers should be worried:
Nothing emphasizes the potential appeal of Shoprite’s entrance into the money transfer business than the chart below:
As can been seen, Shoprite blows everyone away by having a flat fee regardless of the amount being transferred. For the other players, fees vary from 4 to as high as 30% of the transferred amount. The other players will have to reduce their fees or risk being priced out of this sector.
Shoprite has a big presence all over the country with a store network any commercial bank would be proud of. The opening of each new outlet expands the reach of their money transfer services as well as the convenience for people who live in the more remote parts of the country. The current infrastructure projects going on in the country will also be a big boost for Shoprite because people will have easier and better access to Shoprite outlets all over the country.
Shoprite has a very strong, well established brand and its stores have a wide variety of products which are better priced than most competing supermarkets. This attracts consumers from ALL walks of life – whether buying fresh bread in bulk or various meat products – which is important because the more consumers keep going to Shoprite’s outlets, the more likely it is that they’ll be tempted to use the money transfer service (Shoprite Manda Hill - which is the anchor tenant of the mall - has been referred to as busiest store in Africa).
So far, we have seen a reaction from Zampost-Swift Cash who have slashed some of their tariffs and advertised the slogan "you can send money for as low as K2.50". Only time will tell if their offer beats Shoprites offer.
However, this could all go south if mobile money services (which have 3.5m user accounts) from the telecom providers take off like they have in countries like Kenya with M-pesa. It would be very difficult for many of the domestic players in the money transfer business to compete – the ability to transact money with any mobile device regardless of sophistication is very difficult to beat. Fortunately for them, mobile money has not yet taken off like is has in East Africa but remains a big threat to brick and mortar money transfer service providers. The real winners here will be the consumers because at a time of increasing inflationary pressures, they’ll at least have a cheaper alternative to send their funds countrywide. It will be interesting to see how the other players in this sector react.
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *