When Smart Attire Enterprises began in the 1990s, it was a small operation located in the highly populated but low to middle class African township known as Matero in Lusaka. It had little purchasing power and to generate store traffic, it depended in large part on stocking merchandise from Limbada Store Limited, a well-known wholesale company that was based in Lusaka. Although Limbada traded in many goods in and around Lusaka, it was, until 2010, the only company that sold quality men’s shirts that it sourced from India, the Middle East and the United Kingdom. Nawa Nawa, the sole owner of Smart Attire Enterprises, steadfastly refused to compromise on quality and hence depended on Limbada for the supply of top brands in men’s’ shirts. Since Smart Enterprises did not have high sales volume, Limbada supplied the merchandise to Smart Attire on credit terms determined by Limbada and further set the price at which Smart Attire could sell the merchandise. In addition, Limbada would come into a Smart Attire store and stock the shelves in the name of saving Smart Attire labour costs. This situation choked Smart Attire but Limbada insisted that Smart Attire had a choice to go a rural area where Smart Attire could be a wholesaler and sell to itself. This situation choked Nawa Nawa and prompted him to open a shop in Western province a region considered rural, poor and out-of-the-way. As a wholesaler, Limbada was not particularly interested in serving a company that built its stores in such places. Nawa Nawa took his fledgling company public and used the capital raised to build a distribution center to stock merchandise. The distribution center would serve all stores within a 300-kilometre radius, with trucks leaving the distribution Page 3 of 6 center daily to restock the stores. Because the distribution center was serving a collection of stores and thus buying in larger volumes, Nawa found that he was able to cut the wholesalers out of the equation and order directly from manufacturers. The cost savings generated by not having to pay profits to wholesalers were then passed on to consumers in the form of lower prices which helped Smart Attire Enterprises continue growing. This growth increased its buying power and thus its ability to demand deeper discounts from manufacturers. Today Smart Attire Enterprises has turned its buying process into an art form. Since twenty-five percent of all retail sales in Western province are made in a Smart Attire Enterprises store, the company has enormous bargaining power over its suppliers. Suppliers of internationally branded shirts are no longer in a position to demand high prices. Instead, Smart Attire Enterprises is now so important to its suppliers that it is able to demand deep discounts from them. Moreover, Smart Attire Enterprises has itself become a brand that is more powerful than the brands of manufacturers. People don’t go to Smart Attire Enterprises to buy branded goods; they go to Smart Attire Enterprises for the low prices. This simple fact has enabled Smart Attire Enterprises to bargain down the prices it pays, always passing on cost savings to consumers in the form of lower prices. Since 2012 Smart Attire Enterprises has provided suppliers with real-time information on retailing in Zambia in general and Western Province in particular. These have allowed suppliers to optimize their own production processes, matching output to the demands of Smart Attire Enterprises and other stores in Zambia, and thus avoiding overproduction and the need to store inventory. 

Required:

Discuss the types of competition that obtained in the industry in which Smart Attire operated and the competitive strategies that were deployed.