South Africa with a population of around 49 million people is a growing retail market; it owns an advanced substructure backing up comparatively effective dispersion of commodities to rural areas, townships and urbanized centers all across Southern Africa and South Africa. The retail market of South Africa has been predominated by a couple of superstore for instance Woolworths, Spar, Pick n Pay and Shoprite all owned by large South African holding companies. South Africa has gone through a quick development and expansion in the food retail sector after the apartheid ended in the year 1994. (Anderson, 1993)

The sales in retail raised by nearly 5% in the year 2009 to attain $72 billion regardless of the strong influence of the recession worldwide. The sale of beverage and food amounted to a worth of $7 billion and that of convenience stores accounted to $ 1.4 billion and it has been a growth driver for the retail sector. The growth in the food retail sector seems to be promising and is expected that the food retail sector will continue to grow in the near future. (Kinsey, 1998)

The South African food retail market is turning out to be progressively advanced and is furnished by both imported and local commodities. It is anticipated that the food retail industry of South Africa generated a total of $73.9 billion worth of revenues in the year 2011, presenting a CAGR or compound annual growth rate of 11.5% in the year 2007 and 2011. (Bamford, 1997)

Approximately 90% of the stock of user ready products is domestically sourced. The most important development was the growth of super markets that traded a huge amount of all the commodities and especially food related commodities based on the concept of self-service. The super markets that are placed in uptown shopping malls/ centers, have laid a substantial pressure in terms of price on the domestic merchants by buying right away from producers and totally cutting out the middleman, generally with higher turnover and lower margins. (Benson, 1985)

It is forecasted that the performance of the industry would slow down, with an expected compound annual growth rate of 5.8% for the term ranging from the year 2011 – 2016 and by the year 2016 would leave the food retail sector with a worth of $98.1 billion. (Vink, 2002)

TOOLS OF ANALYSIS (Porter’s National Diamond Analysis)

Michael Porter in the year 1990 developed the national diamond model and the intention behind this model was to explain that in the international competitive situations why a few nations achieve and develop and several others does not succeed. The ability of a nation to succeed and to accomplish continued global accomplishment inside a peculiar sector might be explicated by factors apart from the production factors based on which the hypothesis of and Heckscher-Ohlin and comparative advantage are established. (Anderson, 1993)

Michael Porter recognized four characteristics as the sustaining and driving dynamism for the aggressive willingness to compete, in other words both promoting and hampering the formation of originality. The factors are; factor endowments, firm strategy, demand conditions, structure and rivalry, related and supporting industries. This tool of analysis deals chance events and government as externally originated factors for the aggressive willingness to compete among countries. (Benson, 1985)