General Trade, also known as Traditional Trade, operates quite differently from the Formal Trade Sector, which typically features large, widely dispersed retail outlets that shoppers visit by car or public transport. Here’s a breakdown of the defining characteristics of General Trade:
1. High Outlet Density and Small Store Sizes
In General Trade, customers often travel on foot, so retail outlets are much more densely packed and significantly smaller in size. Delivery vehicles frequently make more stops per kilometer, and multiple outlets may be served from a single stop.
A walk through a traditional market, souk or bazaar very quickly conveys the density of retail outlets.
2. Geolocation Challenges
Finding retailers in rural areas or informal settlements can be difficult due to the lack of formal addresses. Many streets have no name, or an informal outlet may be established on the side of a main road without any formal application or record keeping.
However, once geolocated, these outlets can be efficiently integrated into a delivery route.
3. Limited Shelf Space and Small Orders
Since many retailers operate from small premises—sometimes as minimal as a tabletop or hole-in-the-wall shop—shelf space is limited, leading to smaller order volumes. This reduces revenue per stop, making efficient delivery routes critical for profitability.
4. Cash Transactions and Minimal Records
Nearly all transactions in Traditional Trade are conducted in cash, and financial record-keeping is typically minimal. While there is a growing shift toward cashless transactions, most orders, invoices, and receipts are still not formally documented.
Goods reach the retail outlets in two ways. Either the store owner visits the nearest wholesaler and then returns to the store to stock the shelfs, with newly purchased stock, or the FMCG distributor has a delivery vehicle, and conducts sales from the vehicle.
In case of the FMCG distributor there is significant responsibility on delivery teams, who act as both salespeople and administrators.
In both cases accurate record keeping ends when the goods leave the warehouse.
5. Minimal Use of Sales Representatives
Unlike the Formal Sector, where company sales representatives play a key role in large retail outlets, they have limited impact in General Trade.
The sales representative is either part of the warehouse team or the driver making the delivery. Preselling is rare and it is up to the driver or warehouse management to build relationships with retailers.
6. Delivery Timing Is Crucial
When a delivery is made the delivery timing is critical because many retailers have limited cash flow. If a competitor’s delivery team arrives first, the retailer’s available cash may already be spent, resulting in lost sales opportunities.
Higher Risks in General Trade
General Trade faces significantly higher risks compared to Formal Trade. These include:
- Operational Risks: Frequent strikes, protests, poor road conditions, and higher accident rates can disrupt deliveries.
- Limited Support: There are fewer vehicle repair and maintenance facilities in rural or informal areas.
- Crime Risks: The reliance on cash increases the risk of robbery and hijacking, especially in high-crime areas.
Mitigating these risks through market research
Understanding these unique characteristics and challenges is essential for businesses navigating the General Trade landscape.
With retail outlets accurately geolocated it is possible to implement a Route-To-Market strategy that mitigates these risks.
Steve Johnson, Managing Director at Frontline Research Group, says “We have been working in traditional trade since 1996 and have developed skills, systems and experience to provide, not only granular data, but support to our clients in various levels of analysis, insights, and direction too.”
Frontline Research Group conducted market landscape studies, retail census and retail tracking in over 5 million retail outlets in the General Trade sector and helped developed Route-To-Market strategies for some of the largest multinational companies.
For more information or a demonstration contact Steve Johnson, Managing Director on Tel: +230 5493 6376 or email: steve@frontlineafrica.com
