Bottom of the socioeconomic pyramid and urban logistics: A spatial analysis of how traditional retail are arranged

Resumen

The term Bottom of the Pyramid (BoP) coined by Prahalad & Hart (2002) refers to the large population located at the base of the economic pyramid, which generally resides in the periphery, in neighborhoods with less urban infrastructure and consequently with more limited logistical access. As a result of this absence and deficient coverage in the outskirts of large cities, the number of small retailers has been increasing in recent decades, especially not professionalized retailers, filling the gaps left by the traditional retail, to serve primarily the BoP consumers (NAVARRO et al., 2021; BOULAKSIL & BELKORA, 2017). Some of these small retailers, operating stores with a few meters size, usually managed by a single owner or family business, are called nanostores (FRANSOO et al., 2017).

The relevance of nanostores is noted in countries, for example, Brazil, where large retailers such as Walmart and Carrefour have commercial success since the 90’s, despite that, the traditional retail do not exceed 60% of the market share (FRANSOO et al., 2017). On the other hand, mainly due to informality, there is a gap in the registers of nanostores, and for this reason this research carried out a spatial analysis of traditional markets in the city of São Paulo. The location of different types of stores suggests that there is some relationship between the store and its radial position on the city map; however, to validate this assumption or even attribute it to some socioeconomic factor in the resident population, we have carried out a deeper analysis.

From a spatial analysis through Moran’s Index and socioeconomic databases we figured out how traditional markets are integrated and distributed in the municipality of São Paulo. According to the bibliographic survey carried out by Zhou and Liu (2019), the use of databases together with spatial analysis can constitute a model capable of guiding business strategies, public policies and optimizing logistics efficiency by expanding the offer of services, especially in regions most in need.

Thus, the objective of this research was to set the characteristics for a model that guarantees to the BoP population the same possibilities and full access to urban logistics. For this, we selected São Paulo, the largest Brazilian city, and a public source of socioeconomic data called Social Vulnerability Index of São Paulo (IPVS). The IPVS is an index based on the results of the population census (IBGE, 2010), that consists of a typology of situations of exposure to social vulnerability, represented by two dimensions – socioeconomic and demographic, through indicators such as per capita household income, presence of younger children, age and gender of the head of household, and literacy status (SEADE, 2013). To the determination of socioeconomic regions through the IPVS database, we evaluated the location of stores in each cluster according to public data from the largest retail chains. In all, 837 commercial establishments were listed, representing the main retail chains of the Brazilian Association of Supermarkets (ABRAS).

Based on a spatial analysis of the municipality of São Paulo and the calculation of Moran’s index, possible correlations between the geographical distribution of markets and the IPVS were evaluated. The traditional commercial establishments when studied together with the IPVS, showed a strong correlation (Moran Index > 0.6) in addition to a visual spatial relationship segregating the central region, less vulnerable and with better urban infrastructure, and the periphery, with higher social vulnerability.

The joint analysis of this information with the spatial location of stores can lead to the mapping of regions of interest or even the definition of a business model according to the socioeconomic data of the local population. Comparing the characteristics of the richest and poorest populations and regions, would be possible to advise business strategies, increase logistics efficiency and expand the offer of services, especially in the poorest and peripheral regions, where today it seems that the population is served by nanostores. These results encompass the concept of “Environment Justice”, by indicating that despite being independent variables, they have in common the fact that the poorest regions are always the least favored and most exposed.

Key words: Bottom of the Pyramid; Spatial Analysis; Nanostores

References:

Boulaksil, Y., & Belkora, M. J. (2017). Distribution strategies toward nanostores in emerging markets: The Valencia case. Interfaces, 47(6), 505-517.

Fransoo, J. C., Blanco, E. E., & Argueta, C. M. (2017). Reaching 50 million nanostores: retail distribution in emerging megacities. CreateSpace Independent Publishing Platform.

IBGE (2010). Censo Demográfico. Instituto Brasileiro de Geografia e Estatística. Rio de Janeiro, RJ.

Navarro, H. Á. R., Vieira, J. G. V., & Fransoo, J. C. (2021). Understanding urban logistics and consumer behavior in São Paulo city. Case Studies on Transport Policy, 9(4), 1630-1640.

Prahalad, C. K. (2002). The fortune at the bottom of the pyramid. Strategy+ business, 26.

SEADE (2013). Fundação Sistema Estadual de Análise de Dados. Índice Paulista de Vulnerabilidade Social. São Paulo, SP.

Zhou, Y., & Liu, Y. (2022). The geography of poverty: Review and research prospects. Journal of Rural Studies, 93, 408-416.