Chapter 1. Retail markets

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This chapter sets the framework for the guide by considering different types of rural and urban retail markets, how the! operate, what are their likely physical and institutional deficiencies and what benefits might be expected if these defects are remedied. The general focus of the manual is Oft markers for the trading of fresh produce, such as vegetables, fruits, grains, fresh meat, fish, eggs and poultry.

What are retail markets?

Before looking at the markets themselves it is first necessary to define what is meant by retailing. The purpose of retail shops or markets for any commodity is to provide an environment for looking at and buying merchandise that is displayed for sale. With a conventional shop, including a large-scale supermarket, there is usually a sales area where goods are displayed, a shop front used for advertising the goods and a service area where goods can be received, re-packed and stored. With a market stall these functions occur at one place.

A retail market, like any other type of market, is a location at which there is a public gathering of buyers and sellers at a known time. All retail markets involve a large number of transactions of relatively small quantities of goods on a face-to-face basis between a seller and buyer. An essential feature of a market is the opportunity it can provide to immediately and easily compare prices between different sellers of the same product.

Functions of markets

Markets provide low-cost retailing facilities based on small-scale operations and are typically found in the low and middle-income, higher density areas of cities and small towns and in the centres of villages in rural areas. The main functions of markets are:

Evolution of retail markets

Retail marketing systems in western countries have broadly evolved from traditional street markets through to the modern regionally based hypermarket or out-of-town shopping centre. A broad review of the history of retailing and its relationship to the growth of settlements is contained in Chapter 2.

Variation in the types of market, whether rural or urban, can be broadly defined according to a number of characteristics:

by physical and spatial characteristics.

by type of commodity traded:

FIGURE 2.Covered retail market, convertible for use for fairs, concerts, dances and sporting events, and with provision for 50 apartments to be built over the top at a later date, at Vevey, Switzerland. Source: Architectural Record, Volume 79, p. 374-379, May /936. Tarerbey, Schobinger and Getag, Architects.

by time of operation (and services that are offered):

by type of ownership and operation:

Justification for market developments

A market is usually located at a critical point in the overall marketing, transport and passenger movement system. In the case of rural areas, and in many urban areas, markets also form the main link between agricultural producers and consumers.

In formulating a market development programme, whether for a new or upgraded market, there is a great temptation to attempt to solve all the problems experienced at a market by adopting a radical physical solution. Responses to problems might include complete rebuilding, relocation to a new site or the separation of one function of the market (e.g. wholesaling) from the other uses. It is often found that such radical approaches may be both impractical and unnecessary. The best option may be to develop and rationalise operations on the existing site including, particularly, improving the market's management system.

First of all it is necessary to be very clear as to what are the constraints that a development programme will need to address. A survey and analysis of present market characteristics, conditions and operations is invariably required (these are elaborated in Chapter 3 and in Annexes A and B). Typical problems a market may exhibit can be broadly classified into physical problems and social and managerial problems.

Physical problems: these might include the following:

Social and managerial problems: these might include the following:

Components of a market development project

The implementation of a market improvement programme can become a vehicle for addressing the physical and social/managerial problems outlined above. It is important to stress, however, that a project should not be artificially expanded to deal with peripheral problems unless there is an additional budget available for that purpose. With the exception of main urban covered markets, therefore, infrastructure improvements are likely to be very modest.

FIGURE 5 Street market in the 1950s, Copenhagen, Denmark Source: Salodin E. (undated). Wanderings in Copenhagen. Carit Anderson Publishers. Copenhagen.

The typical range of construction works that might be needed for the upgrading of rural markets and small-scale urban markets could include: internal access roads and parking, paving and sales pitches, surface water drainage, including perimeter drainage and outfall structures, perimeter fencing and access gates, tube wells/hand pumps, latrines and, if appropriate, the provision of a market supervisor's office. Traders themselves can contribute to the improvement of the market by, for example, improving building spaces which they rent on a long-term basis or by providing temporary shade structures.

Benefits of market development

There is little point in undertaking market development improvements unless they result in a positive socio-economic impact. To achieve such an aim effective regulation of markets is essential. Inside the market, both hygiene rules and revenue collection activities have to be enforced. Of equal Importance, however, will be the maintenance of order outside the market. Licensed traders in a market will not be willing to cooperate in raising standards if they face competition from unlicensed operators outside who do not pay any of the costs involved in providing a proper service. On the other hand, market development should not be used to artificially reinforce exploitation of traders by providing a monopoly in retail trade to an influential minority.

Existing rules should be enforced within the framework of a coherent policy on the numbers of licenses to be issued and the sites at which selling is allowed. Street hawkers, for example, can play an important role in retailing of low-cost cooked foods, but this should not be allowed to conflict with the activities of markets. One of the major goals of a market development programme should be to re-establish a framework for managing markets. Once created, a wide range of benefits might be expected from a project. These are outlined below. Such benefits may form the basis of the project formulation and economic analysis explained in Chapter 8.

Reductions in crop losses

Many projects are justified on the basis of reductions in crop losses through quicker and better handling in an improved market. However, such losses can be overestimated. Savings are sometimes quoted as being between six to ten per cent of produce by value but this would be very high in normal circumstances. Harvesting and handling at the farm and damage during transport are usually far greater sources of post-harvest loss than the limited handling that takes place in a market. A more realistic level of losses at market level is in the range of two to five per cent of the value of the produce in the case of rural markets and even less with urban markets.

With the most up-to-date facilities there will always be a certain amount of wastage that cannot be reduced and, where produce is of relatively low value, such as tomatoes in the glut season, the effort involved in loss reduction may not even be worth taking. Nevertheless, the provision of covered stalls, better storage and, in many countries, an end to flooding of markets in the rainy seasons, will all help to reduce post-harvest losses to more acceptable levels.

An important aspect of produce loss is pilferage. This can be very much more significant than other losses and may be radically improved by better fencing and security arrangements. The reduction of congestion by the improvement of access to a market will also help to reduce losses artificially created by an inability of producers or traders to sell produce.

Improved efficiency of market operations

Improved conditions in a market can result in substantial savings for market operators. The potential for greater throughput due to an improved layout and the elimination of congestion, resulting in reduced vehicle operating costs (see below) means that operating expenses for both users and management will be reduced. These savings should be reflected in higher rental levels and charges.

However, the present situation in many markets is one of very low rents. Where public facilities are charged out to users at lower than normal levels, the facilities are likely to be used inefficiently. Increasing rents and the level of charges to more realistic levels without a parallel improvement in benefits to market traders, in terms of maintenance or services available, is likely to be met with strong resistance from market users. Improvements have to lead to savings in the trader's operating costs or otherwise market prices are likely to increase to compensate for the additional costs.

Public health benefits

In the case of urban markets, health gains, while they are virtually unquantifiable in financial or economic terms, are likely to be the greatest project benefit. Markets are a major potential source of infection from food and water-borne diseases. The central location of many street markets and their relationship to the public transport system may offer a particularly rapid way for disease to spread. Such diseases can arise from a number of sources, including;

The most immediate health benefit is likely to be a reduction in the more common and less threatening diseases, such as gastro-enteritis and worms. However, if only one epidemic of a more dangerous but less common diseases such as cholera, is prevented or reduced, a market programme will have been justified.

Amenity and aesthetic benefits

There can be substantial improvements in amenity and convenience for all users from market improvements and this has always been viewed as the main benefit of programmes implemented in urban areas. Traders will usually have better stalls with greater protection from the sun and rain. while consumers will be able to make their choices from produce that is more cleanly and attractively displayed.

In the case of market improvements in traditional urban areas there may also be a conservation gain, with related benefits to the tourist trade. Many markets are important public buildings (such as the Starbroek market in Georgetown, Guyana and the Old Stone Town Market in Zanzibar) and when they have been upgraded they can provide the basis of an integrated area improvement programme. Figure 6 is a typical example of such an area upgrading, where a proposal for pedestrianisation of a section of a small coastal town in Britain was developed around the improvement of its fishing port and associated market,

Time savings

Time savings can occur in two ways: for market users and for other road users. In the case of the former the savings will occur because the market improvements reduce waiting time for those delivering and collecting produce. Such savings will tend to be greatest in the case of assembly markets, where the essential function of the market is one of providing a trans-shipment point.

Time savings for other road users occur when the present arrangement of a market has an impact on the adjacent road system. For example, the fruit and vegetable assembly market at Al Husainiah in Yemen straddles the main highway between the port of Hodeidah and the city of Taiz and the whole south-central area of the Republic. This is an extremely busy road with an average daily traffic level of 2,865 vehicles travelling in both directions. During the market's peak season it takes road traffic an hour or more to get through the market area. On that basis there would be considerable benefits to other road users if the market was relocated away from the main road.

Generation of public funds

Many local authorities face severe budgetary difficulties and increased revenues from retail markets would consequently be very welcome as a useful means of generating additional income. In the case of private markets the same arguments will generally apply.

Provided that the raising of these funds takes place within the context of a general improvement in market management the additional funds can provide a significant contribution to upgrading the quality of services offered to both rural and urban residents. The profits will be available for the provision of additional market facilities and for re-investment in other markets and infrastructure. The importance of this is emphasized by the fact that unimproved markets often do not even cover the cost of the staff employed to run them, let alone operations and maintenance, the cost of capital or the rental value of the site.

Income generation is equally important with the introduction of structural adjustment programmes, where in many countries the opportunity is often taken to rationalize the operation of former centralized, state-operated food distribution facilities in order that they can operate as commercially run retail markets. An example of this process, taking place in China, utilizing the site of a state-owned facility, is shown in Figure 7.

Income from additional services

A variant of income generating benefits arises when a market is able to provide services additional to those available before. An example of this is the provision of chill stores for the storage of fruits, meat and fish, and banana ripening rooms. Grading and packing facilities are also a possibility. However, the introduction of such additional facilities needs to be approached with some caution. There is little point in raising the standards of produce presentation if there is no local demand for graded produce.

Impact on agricultural production

Market developments can stimulate increased growth in agricultural production by providing access to market opportunities arising from demographic and income changes. Such "induced" growth is particularly important for smallholder producers who may rely on markets as their sole or main outlet. With the development of an economy they may begin to face stiff competition from larger commercial operators able to afford the use of more sophisticated techniques, such as on-farm grading and packing, and direct sales to supermarkets. Raising standards in markets is likely to provide a means by which small-scale vegetable and fruit producers can improve the efficiency of their marketing in order to compete effectively in the sale of greater quantities of cheaper produce.

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