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of Management Cases

Consolidation In Pakistan's Retail Sector*

Jawaid Abdul Ghani
Asian Journal of Management Cases 2005 2: 137
DOI: 10.1177/097282010500200203

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ASIAN JOURNAL OF MANAGEMENT CASES, 2(2), 2005
SAGE PUBLICATIONS NEW DELHI/THOUSAND OAKS/LONDON
DOI: 10.1177/097282010500200203

Lead Article
CONSOLIDATION IN PAKISTANS RETAIL SECTOR
Jawaid Abdul Ghani

This paper reviews changes which occurred over the last decade in the retail sector
in urban Pakistan, in terms of a decrease in traditional kiryana stores, an increase in
general stores, and the emergence of new formats such as superstores, malls, and
retail chains. These trends are discussed in the context of broader socio-economic
changes, including growth in the urban middle class and disposable incomes. The
paper discusses similar trends that occurred in the late nineteenth century in North
America and Europe, the recent rise in international retailing, and the possibility of
global retailers such as Germanys Metro and the French Carrefour, entering the
Pakistani market. The entry of such firms has often resulted in profoundly altering
the retail landscape, as has been the experience in the less developed markets of East
Europe, Latin America, and the Asia Pacific region.
It is estimated that in 2002, about 6.8 million of the 50 million people living in
urban Pakistan belonged to the upper and upper-middle class, and represented a
grocery market worth $1.7 billion. This segment, projected to grow to 17 million people
by the year 2010, is expected to be the first to switch to modern retail stores. This
paper projects the impact global retailers might have on Pakistans retail landscape.
Keywords: International retailing, Retail consolidation, Consumer behaviour, Global
retail trends, Pakistani retailing industry

INTRODUCTION

A review of historical developments in retail and distribution (Chandler 1977 and 1990;
Messinger and Narasimhan 1995; Colla 2004; OXIRM 2004), shows that increases in con-
sumer disposable incomes and technological developments result in the growth of new
retail formats and the eventual consolidation of the retail sector. The transformation may

The author would like to acknowledge the support of A.C. Nielsen (Pakistan) in generously providing
data on retail trends, and the assistance of Adnan Zahid for his meticulous analysis of various data sets.

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take a few decades, as was the case during the period 1850 to 1920 in the United States,
or more rapidly as in Thailand where the share of modern stores, mostly owned by
global retailers, increased from 5 per cent to 50 per cent of total retail sales in a single
decade during the 1990s. This paper presents a framework for understanding the factors
that appear to trigger changes in the retail landscape. A brief description is then provided
of the historical stages of retail transformation in the developed markets of United States,
Britain, Germany and Japan, and also in a developing market such as Thailand. Major
trends that occurred in the retail sector in Pakistan during the last thirty years are de-
scribed, together with changes in consumer lifestyles and demographics. The paper
concludes with a look into the future of retailing in Pakistan with the likely entry of
global retailers such as Metro, Carrefour, and Makro in the next few years.

RESEARCH FRAMEWORK

Retail trends can be studied in terms of the changing mix of retail formats. These formats
range from traditional street hawkers and family-owned neighbourhood stores, to modern
supermarkets, and hypermarkets. Changes in consumer lifestyles and disposable incomes,
together with changes in technology lead to the emergence of modern formats and the
gradual phasing out of traditional ones. Modern stores are usually larger and thus result
in a net reduction in the number of retail outlets per capita in a city or country. As they
are often organized as part of a chain of retail outlets, they give rise to market concentration
in terms of increased market shares of leading firms.
Figure 1 shows the various factors that contribute to changes in retail format mix.
These include technological developments, changes in consumer behaviour and lifestyles,
the presence of global retailers, supplier networks, presence of national brands, and gov-
ernment legislation (Messinger and Narasimhan 1995; Colla 2004).
Technological developments particularly in transport and communication, reduce un-
certainty regarding logistics and market trends, and allow for the rapid movement of goods
and lower inventory levels. Larger firms are better able to exploit advances in technology,
and hence compete on prices. The department stores and mail-order houses of the 1880s
in the United States utilized advances in telegraph and railroads to exploit economies of
scale through high volumes and stock turnover, and economies of scope by using a com-
mon set of facilities to handle a wide product range (Chandler 1977, 1990). Global retailers
in the 1990s, use modern information technologies and mass distribution systems to
exploit similar economies of scale and scope.
The Internet has emerged as a new channel of distribution for generating significant
traffic for traditional stores and catalogue sales. Scanner technologies using standardized
Universal Product Codes (UPC), market research using consumer and retail panels, and

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 Figure 1
Factors Impacting Retail Consolidation

data obtained through credit card based loyalty programmes, allow retailers to track pro-
duct movements and consumer trends. This information feeds into stock replenishment
and store management decisions. Software firms such as Oracle provide a range of retail
supply chain management products, though some global retailers rely on proprietary
systems.
The new range of technologies provides opportunities for scale and scope economies,
resulting in reduced costs and lower prices. Tescos 700 thousand square feet distribution
centre in Thailand allows a twelve to twenty-four hour delivery lead time to its network
of forty-eight hypermarkets around the country. Each of Wal-Marts twenty-seven
distribution centres occupies a million square feet and serves 150 stores in a 200-mile
radius. Largely because of cost savings from improved supply chain management and
procurement practices, Tesco is able to price goods 720 per cent lower, and Wal-Mart
2025 per cent lower than their competitors (Shannon 2003; Bell and Feiner 2003).
Lower prices are one of the reasons customers switch to modern format stores. Other
attractions include greater variety and range of products available, satellite stores and
food services all under one roof, thus providing the opportunity of combining one-stop
shopping with a family outing.
The major drawback of such large stores is usually distance. Wal-Mart for instance,
typically locates its stores away from the city centres, at the intersection of major high-
ways. This allows Wal-Mart convenient access to the road network, which is critical both
for efficient supply chain logistics and for customers. Property rentals are also lower in
these localities, allowing for the provision of large parking areas for customers.

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 The class of customers attracted to modern format stores is families which are willing
to give up frequent visits to the neighbourhood grocery store for less frequent but longer
and more planned visits to more distant shopping centres. Store preferences are thus
linked to consumer behaviour and lifestyles. Customers attracted to the larger modern
store formats would generally have higher per capita disposable incomes, be two-career
families which consume packaged and pre-prepared foods, and families owning a vehicle
and freezer. Such families tend to be located in the larger metropolitan cities rather than
in smaller towns. As a result, the mix of retail formats tends to vary by level of urbanization
(Colla 2004).
The presence of global retailers has played a significant role in triggering the transform-
ation of the retail landscape in several countries. For instance, within a decade of entering
Thailand, the UK-based Tesco captured 6 per cent of the total retail market (Shannon
2003). Within four years after the French Carrefour entered China, it became the second
largest retailer in the country with $1 billion in sales (Xinxin 2003). Within two years of
entering Bulgaria, the Germany-based Metro had captured 5 per cent of the total retail
market (EIU 2002).
The presence and relative power of global consumer goods manufacturing firms such
as Unilever, impacts the number of items stocked, new product introductions, and private
labels, and also the need to develop new suppliers and overall supply chain management.
The focus on cost savings and the higher bargaining power of large global retailers, at
times results in a decrease in the profits of producers (Useem 2003).
Finally, government policy in terms of foreign direct investment in the retail sector,
level of tariffs on imported goods, and restrictions on retail size, such as zoning laws all
impact the level of retail consolidation. Specific examples of the impact of such policies
in countries such as Germany, Japan, and India are discussed in later sections.

CHANGES IN US RETAIL DISTRIBUTION1

Chandler (1977, 1990) describes the evolution of distribution and retailing in the United
States during the period 18501920. The stages of evolution include the growth of large
wholesalers (184080), the rise of department stores (185080), the development of mail-
order houses (18901905), and the spread of chain stores (190020).2
1
Unless otherwise noted, the material in this section is based on Chandler (1977, 1990).
2
Another key stage involved changes in the wholesale distribution of agricultural products through the
development of commodity exchanges in the 1850s using standardized grading methods, and faster com-
munication and transport (facilitated by telegraph and railroads). By 1850, the US was supplying 75 per
cent of Britains cotton supply, through a hierarchy of commissioned middlemen who provided credit and
transport arrangements for farmers and eventually sold to British textile agents in New York and Liverpool.

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 Changes in distribution and retail were precipitated by other changes in the economy
including the advent of railroads and telegraph, changes in production, rapid population
and economic growth, and the absence of legislation restricting large stores. Economic
growth was reflected in the six-fold increase in the US Gross Domestic Product (GDP) during
the latter half of the nineteenth century, which was considerably higher than that of
other industrial countries, such as Britain and Germany, whose GDP grew during the
same period by two and three times, respectively. Economic growth resulted in increased
spending power, the demand for consumer goods, the desire for shopping convenience,
and the growth of large urban centres. The availability of transportation and com-
munication networks triggered the growth of the modern corporation with professional
managers able to exploit economies of scale and scope in production and distribution.
Mass retailers, in particular, were able to compete on prices and lower margins by ex-
ploiting economies of scale through higher stock turnover and economies of scope through
multiple product lines. As a result, the mass retailer was able to gain market share at the
expense of wholesalers and the smaller independent retail outlets who they served.

Wholesalers
The large wholesalers dominated the mass distribution of consumer goods up until 1880,
when 70 per cent of all manufactured goods (including imports) flowed through these
wholesalers to the end retailer. The rise of large wholesalers was triggered by the advent
of railroads and telegraph in the 1840s. These new forms of transport and communication
dramatically increased speed and reduced uncertainty. Regular supplies decreased the
need for high inventories, allowing the new class of wholesalers to bear the risk of
taking title to goods, and thus gradually replacing the traditional commission agents and
peddlers. The wholesalers competed on low margins, high stock turnover, and a wide pro-
duct range (including clothing, hardware, drugs, and groceries). They developed manager-
ial organizations, buyers and product specialists who would procure products from Europe
and beyond. They also established a network of travelling salesmen to supply goods to
rural stores. It was these wholesalers who often played a key role in introducing and
developing the modern department stores and mail-order houses.

Department Stores
The first major development in retail was during the 1850s, with the rise of the modern de-
partment stores in the urban areas in the 1850s. These stores were initially established by

Cotton and grain dealers using the new commodity exchanges, in large part replaced these traditional
middlemen.

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the larger wholesalers in the city of New York, which with a population of 1.3 million had
rapidly grown to become the largest urban market in the country. Most stores started
with clothing items, and gradually added furniture, jewellery, glassware, books, toys,
and other household goods. Each line was headed by a buyer who was given the autonomy
to purchase, price, and advertise his line. Department stores thrived through fixed prices,
low margins, high volumes, high stock turnover, and mark downs on slow-moving items.
Customers were provided money-back guarantees and accurate descriptions of goods
through extensive local advertising. In fact, department store advertising played a signifi-
cant role in the early development of the advertising industry.
By the 1880s, retailing had become more profitable than wholesaling. By 1900, the
department stores in the urban centres had almost eliminated the need for middlemen
whose low margins had seriously hurt the smaller urban retailers. The traditional whole-
sale business survived based on sales to the rural markets. This was now challenged by
the rise of mail-order houses.

Mail-order Houses
The second major development in retail, particularly in terms of its impact in the rural
areas, was the rise of mail-order houses. Businesses which sold exclusively through cata-
logue and parcel post were first established in the early 1870s, with the support of rural
farmer associations. Earlier, the more innovative wholesalers had sold products through
catalogues carried by salesmen, and mailed to stores between salesmen visits. By the
1880s, typical catalogues consisted of over 500 pages listing 24,000 items, including
clothing, jewellery, drugs, sewing machines, bicycles, guns, gramophones, plumbing
goods, and even some agricultural implements. In 1905, Sears was doing 100,000 mail-
order transactions per day, and owned sixteen manufacturing plants.

Chain Stores
The third development in retail was the rise of chain stores starting in the 1880s. These
stores initially specialized in grocery items, and were located in the smaller towns and
on the outskirts of major cities, thus not challenging the department stores located in
the city centres. In addition to regional grocery chains, a number of national discount
chains, such as Woolworths emerged selling low-priced consumer goods including drugs,
shoes, furniture, and cigars. By the 1920s, with increased mobility provided by automobiles
and the growth of suburbs, chains grew far faster than department stores and mail-order
houses. In fact, the major mail-order houses such as Sears and Montgomery Ward estab-
lished several hundred retail stores during the late 1920s.

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 By 1929, the US retail sector had reached a high level of consolidation. The top 2,000
department stores (of all 1.5 million retail outlets) were responsible for 12 per cent of the
total retail sales. Chain stores had captured 46 per cent of all grocery sales, 38 per cent of
all shoe sales, 34 per cent of petrol stations, and 18 per cent of drug sales (Cassels 1936).
This rapid consolidation resulted in making the dozen or so builders of these retail
empires, the wealthiest families in the country. These new mass retailers were able to
reduce prices below that of the small retailers and yet generate higher profits than
wholesalers. This success came from the ability to exploit economies of scale through
high volumes and stock turnover, and economies of scope from using a common set of
facilities to handle a wide product range. However, these firms continued to remain
owner-managed. The need to raise capital through the stock markets, with the consequent
separation of ownership and management, did not arise due to the sufficiently large
cash flows in the retail industry of the 1920s.
The consolidation of distribution and the rise of the various new formats in mass
retailing came at the expense of small retailers and wholesalers. The latter attempted at
various times to protect themselves through state legislation, but they were generally un-
successful. Thus, urban retailers protested against the growing power of department
stores in 1899. In 1912, rural retailers and their suppliers protested against a bill to ex-
tend parcel post services, which was the main delivery mechanism of the mail-order
houses. They argued that the bill would ruin wholesalers, retailers, and travelling
salesmen. However, farmers and consumer groups argued in its favour. During the great
depression of 1929, the growth of retail chains attracted political protests and legislative
efforts by smaller urban retailers and wholesalers.
During the 1930s, further consolidation took place with the rapid rise of supermarket
chains. During a five-year period (193641), the number of supermarkets increased from
1,200 to over 8,000, and supermarket share of grocery sales increased from 5.5 to over
20 per cent (Messinger and Narasimhan 1995). The greatest growth came in the suburban
areas, rather than in city centres. In fact, during the period 195477, the total value of
retail sales in the central business districts of major cities declined by over 50 per cent
(Robertson 1983; Tarver 1957).
The retail landscape in the United States continued to change over the next several
decades, with the advent of newer formats including the modern discount chain, super-
centres,3 hypermarkets,4 warehouse clubs,5 and specialized category killer stores.
3
Supercentres combined supermarket and discount store lines, together with smaller satellite stores
containing bakeries, photo labs, dry cleaners, optical shops, and hair salons.
4
Hypermarkets provide one-stop shopping for a broader range of goods than the supercentres, including
white goods and appliances, but with fewer choices, and minimal service support. Hypermarkets generally
did poorly in the US and were usually superseded by warehouse clubs.
5
Warehouse clubs provide a limited product range in pallet-size quantities with minimal service levels
in a warehouse-type building, with two-thirds profits coming from annual membership fees.

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By 1991, the larger supercentres and warehouse clubs had gained 50 per cent of grocery
sales, while the share of independent grocers had dropped to 30 per cent, and traditional
supermarkets had 20 per cent (Messinger and Narasimhan 1995). As a result, the number
of independent grocers decreased from over 440 thousand in 1936 to 140 thousand in
1991. During the same period, the number of supermarkets and larger stores increased
to 23,000 and the average number of items per store increased from 800 to 30,000.

CHANGES IN EUROPEAN RETAIL DISTRIBUTION

Chandler (1990) building on earlier work by Jefferys (1954) documents the transformation
of retail in Britain during the period 1875 to 1914. Major developments in retail included
the rise of department stores, chain stores, and consumer cooperatives. These were
organizationally similar to their counterparts in North America, in terms of having buyers
for each major product line who were responsible for setting prices and scheduling the
rapid flow of goods from factory to retail. High volumes and rapid stock turnover resulted
in lower prices and higher profits compared to traditional smaller independent wholesalers
and retailers. However, Britains smaller geographical size provided greater opportunity
to exploit scale economies and resulted in higher levels of backward integration in com-
parison to North America.
In Britain, department stores catered to the upper-end of the market with locations in
major urban centres. Chain stores and cooperatives on the other hand, catered to the
working-class and concentrated on a narrower line of perishable foods and apparel
(primarily shoes). Cooperatives were basically wholesalers who sold goods to members
through a network of retail shops. These members, who had grown to 6.5 million by
1913, received dividends based on purchases made. The largest was the Co-operative
Wholesale Society (CWS) which was established in 1862, and by 1913 had 7,000 employees
in distribution and another 14,000 in production. CWS had its own factories producing
bread, flour, soap, ready-made clothing, shoes, and even cabinets. Cooperatives, such as
CWS, owned or controlled suppliers in Ireland, Europe, and even North America, Australia,
New Zealand, and Argentina to ensure steady supplies and high turnover. As a result,
they also invested in refrigerated warehouses and packing plants in these countries, and
also at major seaports in Britain.
By 1915, the new mass retailers had captured about 20 per cent of all retail trade in
Britain and significant shares in perishable foods (31 per cent), footwear (44 per cent),
and apparel and household furnishings (23 per cent). The smaller independent retailers,
despite generally higher prices, competed by providing extensive credit to customers.
In Germany, the retail sector consolidated to a lesser extent and somewhat slower
than in Britain and the United States. In the 1890s, department stores and chains developed

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in the 1890s in major cities, such as Berlin. The first wholesaler for a group of cooperatives
was GEG, established in 1894. Like CWS in Britain, GEG grew rapidly and by 1903 served
over half a million members through a network of 1,600 stores. GEG owned fifty factories
producing items such as soap, bread, and processed meat. The sharply lower prices of
cooperatives resulted in political protests from independent retailers and wholesalers.
This together with ideological conflicts between socialists and their opponents on the
role of cooperatives resulted in legislation restricting mass retailing through higher taxes,
store space, and number of outlets. Legislation together with lower income and population
led to a slower rate of retail consolidation. By 1926, department stores had captured only
4 per cent, chains 8 per cent, and cooperatives 3 per cent of the total German retail sales.
Retail consolidation continued and by the end of the 1990s, almost 90 per cent of all
retail sales came from outlets affiliated with groups involved with wholesale trading.
About 80,000 independent retailers were organized in 300 affiliations, which resembled
franchise chains by providing centralized buying, and a uniform image and product range
(Wortman 2003).

CHANGES IN JAPANESE RETAIL DISTRIBUTION6

Japan provides an interesting contrast to the rapid developments that took place in the
United States and Western Europe. While the Japanese economy and consumer spending
was similar to that of other developed economies, and Japanese mass production has
been highly efficient, the distribution system has traditionally remained fragmented
and inefficient. The low level of retail consolidation is reflected in the high number of
retail outlets per thousand populationfourteen in Japan compared with seven in the
US and Germany in 1985. The smaller size of each outlet is reflected in the lower number
of workers per retail outletfour in Japan as compared to seven in the US and six in
Germany. The higher number of wholesaler layers can be understood by the fact that 40
per cent of Japanese wholesalers sell to other wholesalers compared to 25 per cent in
the US, and 16 per cent in Germany. As a result of the fragmented and multilayered dis-
tribution system, prices of consumer goods are generally higher than in other developed
economies.
The slower pace of retail development has been explained in terms of cultural factors,
such as a sentimental preference for tiny shops, the preference for purchasing small
quantities of fresh food from neighbourhood stores due to small homes and kitchens,
and the difficulty of using cars in Japans congested streets. Retail provides a valuable

6
The section on Japanese distribution is based on Spar (1999) and Ito (1992).

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social service by providing employment opportunities, particularly for pensioners. Retail
provides employment to 18 per cent of the labour force, and over 25 per cent of the shops
have owner-operators aged over sixty.
Diversified conglomerates, such as Matsushita and Toshiba, have also restricted retail
consolidation and maintained high price levels by distributing their brands only through
exclusive keiretsu affiliated stores. In 1991, there existed over 20,000 such small stores
carrying single brands with company enforced prices and service levels.
Regulation has played a significant role in restricting retail consolidation. In 1956, the
Department Store Law supported by the political pressure of 1.4 million storeowners,
required permits to be obtained for each new department store. In 1973, the Large Scale
Retail Law required a rigorous screening process for building any store over 16,000 square
feet. The amended law in 1982 required that large store operators explain their plans to
local retailers directly. In case local retailers decide to boycott or raise objections in the
explanation meetings, the screening process can take between two and seven years to
complete. As a result, by 1990 there were only about 2,300 stores with over 30,000 square
feet in Japan. However, recent relaxations of previously stringent regulations in 1998
and in 2000 indicate that retail consolidation will occur in the years to come.
The restriction on large stores gave rise to small 1,100 square feet convenience store
chains. By 1992, there were over 42,000 such stores with a share of 8 per cent of total
retail sales.

RISE OF GLOBAL RETAILERS

The previous sections reviewed the evolution of retail in the major developed economies
of North America, Europe, and Japan. This section and the next discuss the rise of global
retailers and their impact, particularly on markets in less developed economies.
During the 1990s, intense mergers and acquisitions resulted in the rapid growth of
large retailers and concentration of the retail sector, particularly in the developed econ-
omies. Wal-Marts $4.6 billion sales in 1983, increased to $32 billion in 1990, and by 2004
it was the worlds largest corporation with $250 billion in sales, 1.5 million employees,
and 5,000 stores worldwide. In 2001, Wal-Mart contributed 2.3 per cent share of the total
US Gross Net Product (GNP), held 7 per cent of the total US retail market, and controlled
20 to 40 per cent share in a wide variety of consumer goods, ranging from pain remedies
and toothpaste to photographic film and dog food. Wal-Mart also accounted for 17 to 40
per cent of the total sales of leading consumer firms such as P&G, Revlon, Kraft, and even
Disney. The French Carrefour, the second largest retailer with $93 billion sales in 2004,

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is considered to have the highest global presence with 11,000 stores in thirty-one countries,
followed by the German Metro with $43 billion in sales and 2,400 stores in twenty-eight
countries.
The large size of retailers, such as Wal-Mart and Carrefour, allows them to benefit from
high levels of scale and scope economies. Wal-Mart supplies 80 per cent of purchases
from its own twenty-seven distribution centres. A typical centre is a million square feet
with 700 employees, operating twenty-four hours a day, and serves 150 stores in a 200-mile
radius. Efficient scheduling allows products to be delivered continuously to ware-houses,
repacked, and dispatched to stores with minimal inventory levels throughout the value
chain. The result of such cost efficiencies is low prices. By 2002, Wal-Marts prices were
2025 per cent lower than those of its competitors. The typical impact of Wal-Marts
entry into the market has been to drive average prices down by 13 per cent. As a result,
a 2002 McKinsey study found that Wal-Mart alone was responsible for about 12 per cent
of the total US productivity increase between 1995 and 1999 (Useem 2003; Bradley and
Ghemawat 2002; Bell and Feiner 2003).
Low prices contribute significantly to the high market shares of large retailers. During
the period 1991 to 2000, the share of the top ten retail firms increased from 26 to 40 per
cent of US grocery sales. Retail concentration was even higher in the UK and Germany.
In Britain, the share of food sales of the top five retail chains increased from 58 per cent
in 1984 to 77 per cent in 1999, while the share of independent grocers decreased from
29 per cent to 7 per cent during the same period (Alexander and Davies 2003). In Germany
the top five chains had 60 per cent share of total grocery sales (Wortman 2003). In Japan,
however, concentration levels remained low with the top five firms controlling 6 per
cent, and even the top twenty controlling only 12 per cent of the total retail sales in 1999
(Alexander and Davies 2003).
In 2000, seven of the ten largest retailers in the world were based in the United States.
However, besides Wal-Mart, none had any significant global presence. International re-
tailing continues to be dominated by European retailers. According to the global retail
index, which considers factors such as percentage of foreign sales, number of countries
of operation, and home market dominance, eight out of the top ten global retailers were
European. The rise of European global retailers is attributed to stagnant growth and
restrictive legislation in domestic markets, an increase in free trade areas, increased
consumer spending, and converging tastes and habits in foreign markets. Retailers from
Western Europe, particularly Germany, UK, and France have invested in South Europe
including Spain, Portugal, Italy, Greece, and Turkey. In addition, these firms have invested
in East Europe, the Middle East, and the Asia Pacific region (Alexander and Davies
2003). US firms on the other hand, have generally remained focused on Canada and
Latin America (Colla 2004).

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 Each of the global retailers have their own distinctive retail formats, such as Carrefour
in hypermarkets, Wal-Mart in supercentres and warehouse clubs, and Metro in Cash and
Carry focusing on volume sales to institutional customers and retailers. Table 1 shows
typical retail formats in terms of average store size and number of units stocked.

Table 1
Modern Store Formats
Store Format Area (000 sq. ft) No. of Items (000)
Convenience stores 2 2.3
Conventional supermarkets 23 15
Superstores 42 23
Supercentres/Combo 95 60+
Hypermarkets 174 100+
Wholesale clubs 105 5
Source: Adapted from Nielsen,1992.

The entry of global retailers has generally resulted in heightened competition and
lower prices, a rapid consolidation of the host market, increased market share of new
format stores and loss of market share by traditional independent retailers. The latter
have generally responded by forming buyer associations and attempts at restrictive
legislation. Generally, the greatest impact has been on the food segment, followed by
general merchandise, and later specialized categories such as toys and electronics.
The impact of Carrefours entry into a market, with a focus on low prices has generally
resulted in rapid domination and an increase in hypermarket share of grocery sales.
Within a decade, hypermarket share of the grocery market increased to 51 per cent in
France, 41 per cent in Portugal, 34 per cent in Spain, 20 per cent in Thailand, and 14 per
cent in Italy. Within four years of its entry into China in 1995, Carrefour was the second
largest retailer in the country with $1 billion in sales (Xinxin 2003).

RETAIL TRANSFORMATION IN THAILAND

The transformation of retail in Thailand7 during the 1990s provides insights on the impact
of global retailers on a developing economy. The first hypermarket was established by the
Japanese Jusco in 1985. By 2001, there were 111 hypermarkets, eighty-one supermarkets,
forty-eight department stores, 2,543 convenience stores, and 2,900 personal care stores.
7
Note that in 1999, Thailands population was 62 million, per capita GDP was $6,100, and total GDP
(Purchasing Power Parity) was $369 billion compared to Pakistans at $130 million, $2000, and $270 billion,
respectively (CIA World Fact Book 1999).

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The share of these modern retail formats rose from less than 5 per cent in 1991 to 50 per
cent in 2001. All the modern stores, other than the department stores, had virtually
100 per cent foreign ownership. During the same period, the number of traditional stores
decreased from 400 to 300 thousand.
The impact of a global retailer is linked to the strategy it adopts. This can be illustrated
through steps taken by the UK-based Tesco, the third largest global retailer in 2004, with
sales of $63 billion, over 300,000 employees, and 2,300 stores in twelve countries. Tesco
entered Thailand in 1994. By 2004, it had forty-eight hypermarkets, 21,000 employees,
procured $1.5 billion worth of goods from 2,900 local suppliers, and was the countrys
largest retailer with a 6 per cent share of the total retail market. Tesco also launched a
chain of petrol-pump based convenience stores, a store credit card, and gradually de-
veloped a range of private label brands that accounted for almost 10 per cent of the sales.
Thailand is designated as one of six global sourcing hubs for Tesco (UK), which sourced
about $100 million worth of goods from Thailand (The Nation 2004; Yahagi 2003; Shannon
2003).
An efficient distribution system is central to the Tesco strategy. The Wang Noi distri-
bution centre covers 700,000 square feet with specialized areas for handling a range
of goods from fresh, chilled, and frozen foods, to apparel. The centre uses an electronic
bar code and sorting conveyer system, and is designed to deliver goods to Tescos chain
of stores within twenty-four hours from the time the goods are brought into the centre.
As a result, stocks both in stores and the distribution centre are reduced. An information
network allows for paperless transactions through an automatic replenishment system,
with twelve to twenty-four hour delivery lead time, and improved scheduling reduces
the number of delivery vehicles.
Scope economies derived from distribution efficiencies, together with scale economies
from high stock turnover result in reduced costs. Indeed, the greatest impact of global
retailers has been to lower prices. For instance in 2003, Tescos roll-back campaign
resulted in a 7 to 20 per cent reduction in its already low prices on more than 1,000 fast-
moving consumer products in forty-four categories. Competitors responded by further
reducing prices.
Low prices, together with the convenience of shopping in an air-conditioned one-
stop shopping centre are major reasons behind the success of modern format stores,
particularly hypermarkets. For instance, a typical Tesco hypermarket near Bangkok has
130,000 square feet selling area and involves an investment of $30 million. The store
would typically be located in a 350,000 square feet shopping centre, which includes
about 5,000 square feet for food courts, 100,000 square feet occupied by another 100
smaller retailers, and a 1,000 car parking area. A typical hypermarket would have 50 per
cent of its sales from non-food items such as home furnishings, apparel, leisure goods

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and electronics, and would be open from eight in the morning to midnight to accommodate
evening shoppers in the hot climate. Some Tesco hypermarkets remain open twenty-
four hours a day, 365 days a year.
The rapid growth of global retailers resulted in considerable protests by local inde-
pendent retailers and wholesalers. The increased power of large retailers also eroded
profits of suppliers and manufacturers. Bomb attacks and firing from rocket launchers
on Tesco stores in Bangkok in 2001 were attributed to mafia type organizations that had
traditionally controlled the flow of goods in the country. The government responded to
the discontent by new regulations controlling large retailers in terms of location, service
hours, traffic congestion, and parking space. A government sponsored company was
formed to provide franchise-style services to an estimated 10,000 to 100,000 independent
retailers. Members are provided with credit, subsidized cash registers, and a tax amnesty
for past dues (Shannon 2003).
An interesting contrast to Thailand is the case of India, which so far has not encouraged
foreign direct investment in the retail sector. Local firms are rapidly developing modern
format supermarkets and hypermarkets. A leading Indian retailer is Biyani with over
3 million square feet of department stores, hypermarkets and supermarket chains. Others
include Tata Groups Westside department stores, and the RPG Groups Spencers. It is
estimated that such modern format stores control 3 per cent of the total retail sales worth
$6.4 billion, and are expected to capture 9 per cent of the retail sales worth $23 billion,
by the year 2010 (Business Week 2005).

RETAIL TRENDS IN PAKISTAN

In 20032004 the wholesale and retail trade sector contributed Rs 897 billion to the national
GDP and employed 6.6 million individuals. As a result, this sector was the second largest
sector in terms of contribution to GDP and third largest in terms of employment.8
The structure of the population in terms of disposable income and lifestyle, and also the
structure of retail, differ widely by level of urbanization. As discussed earlier, the rise of
new retail formats generally begins in the larger cities; hence, the analysis will be limited
to urban Pakistan. The analysis will also be limited to stores selling fast moving consumer
goods (FMCG) such as packaged foods, personal care and household items. In 1988,
according to the Census of Establishments9 there were sixteen retail outlets per thousand

8
200304 GDP share of agriculture was 23 per cent, trade 18 per cent and manufacturing 18 per cent.
Employment in agriculture was 43 per cent, social services 15 per cent, trade 15 per cent, and manufacturing
14 per cent. Pakistan Economic Survey, 200304.

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population in the urban areas of Pakistan. This is comparable to Spain with fifteen (in 2002)
and Japan with fourteen outlets per thousand (in 1985). However, this is considerably
higher than that in the developed countries, such as UK with the most consolidated
retail sector having 4.5 outlets per thousand, followed by France with 5.4, and Germany
with 5.7 (OXIRM 2004).
Tables 3 and 4 provide data on trends in different categories of retail outlets. Table 2
describes the basic categories of retail outlets, based on definitions used by A.C. Nielsen
and by the Government Survey of Wholesale and Retail Trade.

Table 2
Retail Format Definitions
Retail Format Format Definition
General stores Allocate over 50 per cent shelf space to branded/packaged grocery items including
foods, personal care and household goods. Products are stocked on floor-or-wall-
mounted shelves. Service is provided over the counter, rather than through self-
service. Typically 500 square feet in size.
Kiryana stores Traditional small shops where goods are mostly stocked in sacks kept on the
floor. These shops use over 50 per cent of the floor space for unbranded grocery
items such as spices, sugar, pulses, rice, flour, and kerosene oil. These shops also
stock some branded/packaged items. Typically 300 square feet in size.
Groceries & provisions Category used in Government Survey of Wholesale and Retail Trade (1975, 1984).
Similar to Nielsens definition of kiryana store, but also including shops not
stocking any branded items. Typically 250 square feet in size.
Bakeries Sell fresh products such as bread and cakes, together with branded foods (in less
than 50 per cent of the stores). Typically 400 square feet in size.
Kiosks Sell cigarettes, pan (popular leaf and beetle nut snack), beverages, and limited
assortment of packaged foods. Typically 50 square feet in size.
Supermarkets Similar to general stores but larger. Typically includes self-service, and multiple
check-out counters. Over 1,000 square feet in size.
Source: A.C. Nielsen, Federal Bureau of Statistics.

Table 3 provides data from two different sources. The 197584 data is based on a
sample survey conducted by the Federal Bureau of Statistics (FBS) of about 23,000
wholesale and retail outlets, including non-food stores such as those selling clothing,
furniture, etc. Estimates for the total number of retail outlets were based on extrapolation
of the sample data. Results presented for 197584 in Table 3 are generally restricted to

9
The 1988 Census of Establishments provides the most comprehensive and accurate estimate of all retail
outlets, including outlets selling fresh vegetables, meat, and milk. Results of the 2002 Census are expected
to be available later in 2005.

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store categories dealing only in FMCG goods as discussed above. The 19922002 data is
based on a com-plete census of retail outlets conducted periodically by A.C. Nielsen, a
leading inter-national market research firm. The Nielsen data covers all outlets which
sell FMCG goods.

Table 3
Stores per Thousand Population
197576 198485 1992 2002
Total grocery stores 113,310 146,710 136,177 276,218
Urban population (million) 18.80 28.20 34.90 49.40
General stores 0.73 1.03 1.09 2.71
Groceries & provisions 4.01 3.17 N.A. N.A.
Kiryana stores N.A. N.A. 1.61 1.51
Medical stores 0.34 0.36 0.30 0.38
Bakeries 0.10 0.14 0.17 0.15
Kiosks 0.85 0.51 0.71 0.83
Total 6.02 5.21 3.90 5.59
Source: Survey of Wholesale & Retail Trade 197576, 198485; A.C. Nielsen Census 1992, 2002.
Note: N.A. = Not Available.

Note that the two sets of data presented in Table 3 are not quite comparable due to the
different methodologies used and variations in category definitions. Specifically the FBS
data is based on a sample survey, while Nielsens is based on a complete census. FBS data
covers all outlets, while Nielsens is restricted to FMCG outlets. Finally the FBS category
Groceries and provisions includes a broader definition than the Nielsen category kiryana.
However, within each data set, the numbers are comparable, and hence trends can be
inferred for the two periods 197584 and 19922002, separately.
Table 4 presents market share data by store category for two products, i.e., a mass product
(toilet soap), and an upscale product (powdered drinks including Tang and Energile).
This data is based on sales data collected every month from a panel of 2,200 outlets as
part of Nielsens retail measurement service. During the first half of 2002, 19.4 million kg
of toilet soap were sold in urban Pakistan. This increased to 24 million kg by 2004.
Therefore, in mid-2002 the total soap sales were Rs 2.4 billion of which 54.4 per cent
were sold through general stores and 41.8 per cent through kiryana stores.
Table 3 shows some clear trends. An overall decrease in outlets per thousand took
place during the period 197584, while expansion took place during 19922002. The de-
cline may be partly explained by the negative impact on private investment resulting
from nationalization policies during the mid-1970s. The retail expansion of the 1990s
may reflect the impact of deregulation and overall economic growth during this period.

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 Table 4
Market Shares by Store Format
Toilet Soap Powdered Drinks
JanJune JanJune JanJune JanJune JanJune JanJune
2002 2003 2004 2002 2003 2004
Sales (kg or servings in million) 19.4 21.9 24.0 21.0 44.0 81.0
Sales (Rs million) 2,397.0 2,803.0 3,249.0 82.0 201.0 359.0
General stores 54.4 56.3 57.4 61.3 67.3 66.1
Kiryana stores 41.8 39.9 37.9 35.0 26.9 25.8
Medical stores 2.2 2.1 2.3 0.0 0.0 0.0
Bakeries 0.4 0.5 1.0 2.8 4.7 7.1
Kiosks 0.5 0.4 0.5 0.0 0.0 0.0
Supermarkets 0.6 0.7 0.8 0.9 1.0 1.0
Total (per cent) 100.0 100.0 100.0 100.0 100.0 100.0
Source: A.C. Nielsen (Pakistan).
Note: Percentages reported for each store category are given in percentage of total rupee sales.

Figures 2 and 3 show changes in the number of kiryana and general stores during the
197584 and 19922002 periods. Traditional kiryana and grocery provision stores show a
clear decline. The share of toilet soap sales through kiryana stores decreased by 4 per-
centage points over a 3-year period (200204) from 41.8 to 37.9 per cent. An even sharper
decrease appears in the upscale market represented by powdered drink sales, where the
share of kiryana stores decreased by 9 percentage points during this same period.
The decline in kiryana stores has been offset by the rapid rise of general stores. The
number of general stores per thousand population increased by 41 per cent during 1975
84, and by 150 per cent during 19922002. Market share of general stores increased both
for mass products by 3 percentage points and upscale products by 5 percentage points
over the 3-year period 200204. Bakeries have also shown a rise in market share. This
may reflect the recent increase of retail chains in this category, resulting in standardization
and upgradation of facilities. Supermarkets that in 2002 numbered only fifty in all of
urban Pakistan, are gradually gaining market share, and may well become the dominant
format in the not-too-distant future.
If current trends were to continue, one can expect that kiryana stores will lose about
23 percentage points a year and thus, based on a rough extrapolation, will have less
than 25 per cent of the mass grocery market, and only 10 per cent of the upscale market,
by the year 2010. At the same time, general stores will increase their share, but will be
threatened by the rise of supermarkets and bakery chains. The latter type of modern
format stores can be expected to capture about 15 per cent of the upscale market by 2010.
However, as will be discussed later, it is expected that these trends would be sharply
accelerated with the entry of global retailers.

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 Figure 2
Stores per Thousand: 197584

Figure 3
Stores per Thousand: 19922002

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 CONSUMER CLASSES

A key driver of retail consolidation is changes in consumer incomes and lifestyles. This
section describes consumer classes in urban Pakistan. Table 5 provides a profile of urban
consumers in terms of ownership of selected household durables, income, consumption,
and education. Ownership of durables is considered a key indicator of lifestyle and con-
sumption and purchase behaviour. The ownership of a car or motorcycle, and a refriger-
ator affects a familys ability to consolidate purchases of grocery and household items in
once or twice a month trips to a more distant shopping centre.
Table 5 is based on analysis of data from the Household Integrated Economic Survey
(HIES 2002) conducted by the Federal Bureau of Statistics in 2002, using a sample size of
about 15,000 households. HIES contains data on household composition and income.
Detailed data is available on expenditures on some sixty categories of fresh food items
(such as milk, meat, fruits and vegetables), fifty categories of groceries generally pur-
chased monthly (such as rice, flour, pulses, cooking oil, tea, packaged foods, soap, deter-
gents), and a variety of other expenditures on education, utilities, etc. It provides data
on total grocery expenditures on grocery items including food and household consumer
goods (FMCG).
One check on the level of accuracy of the HIES data is to compare total household ex-
penditure for a category such as toilet soap, with that estimated by the Nielsen retail
audit. An analysis of HIES 2002 indicated that total annual expenditures on toilet soaps
by all urban households were Rs 3.8 billion, which is about 80 per cent of the Nielsen
estimate of Rs 4.8 billion, as given in Table 4. The two numbers are similar enough to
suggest that the HIES expenditure data is quite reliable. In fact, HIES probably under-
estimates the market with actual numbers being at least 25 per cent higher.

Table 5
Consumer Profile by Economic Class
Grocery
College Annual Market
Economic Durable Households Population Education Grocery Annual Size
Class Owned (per cent) (million) (per cent) Expenditure Income (billion)
Upper Car 5.6 2.8 54 101 K 410 K 43
Upper-Middle Motorcycle 11.5 5.8 24 63 K 239 K 54
Middle Refrigerator 24.6 12.3 16 55 K 162 K 100
Lower-Middle Television 25.0 12.5 5 44 K 110 K 83
Lower None of above 33.3 16.7 3 35 K 90 K 87
All Urban 100.0 50.0 12 49,121 146,748 367
Source: Analysis based on data from HIES 2002.

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 Households were categorized based on the ownership of four major durables, i.e. a
car, motorcycle, refrigerator, and television. A household owning a car is classified as
upper class. Of the remaining households, those owning a motorcycle are classified as
upper-middle class. Similarly, of those remaining, households owning a refrigerator, and
a tele-vision, are classified as middle and lower-middle, respectively. Thus, all upper
class segment households own a car and typically will also own all the other three
durables. The upper-middle segment does not own a car, but they do own the other three
durables. The middle class segment does not own a car or a motorcycle, but own a refriger-
ator and television. The lower-middle segment only owns a television, while the lower
segment owns none of these four durables.
Ownership of household durables has generally been found to be a useful indicator of
socio-economic class. For instance, the Brazilian Association for Marketing Research
(ABIPEME) uses a durable index together with the number of years of education of the
chief earner of the household, to classify households. The durable index is based on the
ownership of cars, TV sets and VCRs, refrigerators and freezers, washing machines,
vacuum cleaners, and the number of bathrooms and domestic employees. The Pakistan
Advertisers Society (PAS) sponsored a Socio-Economic Classification (SEC) study in 1998,
based on a survey of 20,000 urban households. The resulting SEC scale, determined by
the education and occupation of the chief earner of the household, is based on the
classification scheme used by The European Society of Opinion and Marketing Research
(ESOMAR). However, the ESOMAR scale also uses durable ownership10 for selected seg-
ments where the chief earner may be retired for instance.
Note that the analysis shown in Table 5 is based on the durable index rather than the
standard SEC index. This was due to the difficulty of mapping occupation codes used in
the HIES data, to occupation classifications used in SEC. An example of an HIES occupa-
tion category which is difficult to map is armed forces.
In 2002, there were 50 million people living in about 7.5 million households in urban
Pakistan.11 About 44 per cent of these households had two or more earners, and 71 per
cent had a child under the age of ten (HIES 2002). Table 5 indicates that about 2.8 million
people (5.6 per cent of 50 million) belonged to the upper segment. People in this seg-
ment owned a car12 and had an average annual household income of Rs 410,000 ($7,000).

10
The ESOMAR consumer durables include colour TV, video recorder, video camera, two or more cars, a
still camera, home computer, electric drill, electric deep fat fryer, radio-clock, and a second home or a
holiday home/flat. See ESOMAR (1997) and Ghani (2005) for further details.
11
According to the 1998 population census, 32.5 per cent lived in urban areas. A revised definition treat-
ing localities adjacent to major cities as urban, rather than based on administrative boundaries, raises the
urbanization estimate to 36.2 per cent (Arif 2003).
12
Further analysis of the data indicated that 30 per cent of the car owners also owned a motorcycle.

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Over 60 per cent of such households had a chief earner with college education, i.e. over
twelve years of formal education. Annual expenditures on grocery items were Rs 101,000.
The total size of the grocery market (which includes food and FMCG items) represented
by this segment is, therefore, Rs 43 billion annually.
The upper-middle and upper class segments together consisted of about 8.6 million
people, and a grocery market worth about Rs 100 billion ($1.7 billion) annually. This
class of individuals has the disposable income and mobility to shop in modern format
stores, and it is expected that this class will be the initial target segment for global retailers.
The size of the middle and upper class has gradually increased over the years, par-
ticularly over the last three to five years. During the period 1992 to 2002, average monthly
income of urban households increased from Rs 4,500 to Rs 12,200, while national per
capita GNP increased from Rs 13,000 to Rs 29,000 during the same period. More significant
are annual car sales, which, having remained roughly stagnant at about 30,000 to 40,000
cars over the last two decades up until 2001 increased to 60,000 in 2002, to 100,000 in
2003, and 120,000 annual sales in 200405. Similarly, annual motorcycle sales increased
from about 100,000 in 2001 to over 340,000 in 2005. Other indicators of changes in con-
sumer spending include the rapid increase in mobile phones from a base of 300,000
subscribers in 2001 to 7 million in 2005. Consumer goods companies have experienced
rapid growth. For example, Nestle, which grew from about Rs 1 billion in sales in 1994 to
Rs 17 billion in 2005, and is targeting towards becoming a Rs 100 billion company
by 2014.
One of the drivers of increases in consumer spending has been an increase in consumer
loans for the purchase of household durables, from about Rs 50 billion in 2002 to Rs 75
billion in 2003. Another factor has been the increase in remittances from Pakistanis
living abroad and larger numbers of migrants returning from North America following
the September 11 crisis in 2001.

RETAIL LANDSCAPE IN 2010

It is expected that the rate of urbanization will gradually increase from the current level
of 35 per cent to about 60 per cent of the population by 2025. At this rate, it is forecasted
that the urban population would reach 70 million of the projected 175 million population
in the year 2010 (Zahir 2003). Population increases together with a rapid increase in the
ownership of durable goods should double the size of the upper-middle and upper class
urban population to 17 million by 2010. It is expected that the policy of devolution of
administrative power from the provinces to the districts, will result in the growth of district
headquarters, thus increasing consumer spending in the smaller cities, and not just the
larger cities.

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 There are indications that several global retailers including Metro, Carrefour, and Makro
are seriously considering the possibility of investing in Pakistan in the next one or two
years. Metro is the global leader in cash and carry, and it is expected that the greatest
impact of Metro would be on traditional wholesalers supplying to institutions such as
schools and large businesses, and to small retailers. For instance, within two years of
entering Bulgaria, Metro had captured 5 per cent of the total retail market (EIU 2002).
Carrefour and Makro would have the greatest impact on the grocery and traditional
department store segments. In addition, it is expected that global retailers will gradually
diversify their range of product offerings to include electrical goods, and retail financial
services such as credit cards and insurance (Alexander and Davies 2003; Useem 2003).
If the experience of Thailand is taken as a benchmark, one can expect that by 2010,
modern formats particularly large supermarkets, hypermarkets, and convenience store
chains will have captured about 25 per cent of the total retail market, and most of the
middle and upper class markets. At the same time, one can expect that the number of
outlets per thousand population would decrease from the current level of about fifteen
down to ten. It is expected that the share of total retail sales held by both traditional
kiryana and general stores would decrease from about current levels of 95 per cent to
50 per cent.
Local retailers are expected to respond by developing their own local chains to exploit
scale and scope economies. In fact, during the previous five years in particular, several
chains have emerged in a variety of segments, including bakeries (Gourmet, Shezan),
sweetmeats (Nirala), medical stores (Fazal Din), shoes (over a dozen chains including
Bata and Servis, with several hundred stores each), and clothing (Crossroads, Mushrooms,
Textillion). Most of these chains have ten to thirty stores covering the dozen major cities,
and have plans for further expansion. For instance, during the period 1998 to 2005, Nirala
Sweets grew from being a four outlet chain in a single city, to a thirty-five outlet chain in
eleven cities, including outlets in the Middle East.
Local retail chains are increasingly turning to professionals, mostly with Management
degrees from leading business schools, for the management of these businesses. These
chains invest in technology, and several local software firms have emerged to provide
retail solutions for this sector.
In addition, several traditional department stores such as HKB in Lahore are expanding
the number of stores and covering smaller cities. New shopping centres with food courts,
family entertainment, and parking facilities, such as Park Towers in Karachi and Pace in
Lahore are becoming increasingly popular. Globally, there is a trend towards increasing
homogeneity in shopping centres whether in Kuala Lumpur or Paris, with developers
adopting similar floor layouts and attracting the same set of global retailers (Alexander
and Davies 2003). If this practice gains popularity in Pakistan, one can expect a network of

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shopping centres to be established in the major cities of the country, each consisting of
a mix of similar retail brands.
It is important to add a word of caution. While there are several success stories, there
have also been some notable failures. For instance, Pace and Tesmart in the mid-1990s,
despite being headed by individuals with considerable international retail experience,
failed in their plan to develop a chain of stores, which combined groceries with household
goods and clothing. According to informed observers, the failure was due to a variety of
reasons, including misestimates of cash flow requirements by local financiers of the pro-
ject, supply chain and procurement problems, selection of target market segment, and
parking problems. Local and global retailers planning to expand operations in Pakistan
can learn from the experiences of such failures.

CONCLUSIONS AND FURTHER RESEARCH

The structure of retail has been gradually changing in urban Pakistan. At current rates,
it is expected that by 2010 both kiryana and general stores will lose market share, while
modern retail formats will gain up to 25 per cent of total retail sales. It is estimated that
the upper-middle and upper class in urban Pakistan consisted of about 8.6 million people
in 2002 that spent about $1.7 billion annually on groceries and FMCG items. This segment
is expected to double to 17 million by the year 2010. It is expected that most of this seg-
ment will switch to modern format stores, particularly if global retailers enter the market.
Whether or not these forecasts are accurate, one can state with a fair amount of certainty
that the entry of global retailers will have a profound impact on the structure of retail
in the country. This is a rich area for further research, whether in the area of changes in
retail format or consumer behaviour. Further work on retail formats would require both
quantitative analysis of time series data to develop models and test hypotheses,
complemented with detailed case-based research to study how individual retailers respond
to challenges and exploit economies of scale and scope in their operations. Research is
also required on understanding the drivers of consumer purchase behaviour and a more
detailed analysis of alternative bases for segmenting consumers. The impact of changes
in retail format on urban employment is another important area of research.
The findings presented in this paper are based on somewhat sketchy data. Data sets
were provided by the Federal Bureau of Statistics, and also marketing research firms
particularly A.C. Nielsen who generously shared their data for the purposes of this study.
Further research requires access to micro level data, so that analysis can be performed
at the appropriate level of detail. Of particular relevance would be the forthcoming
Economic Census 2002, which would provide a valuable comparison to the Economic
Census of Establishments conducted in 1988. Similarly several of the major multinationals

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such as Unilever (Pakistan) and market research agencies such as Gallup (Pakistan) and
A.C. Nielsen have access to longitudinal panel data on consumption habits. Sharing of
such data sets for research purposes will certainly be a major step in not only documenting
aspects of the business history of Pakistan for future researchers and students, but also
in providing valuable insights for practitioners.

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