Small en­ter­prises ham­strung by shop­ping cen­tre own­ers in favour of su­per-re­tail­ers

CityPress - - Business - LYSE COMINS busi­ness@city­

Ma­jor shop­ping malls and na­tional re­tail­ers are al­legedly en­gag­ing in “loose car­tel” be­hav­iour that is “can­ni­bal­is­ing” small town­ship busi­nesses, the Com­pe­ti­tion Com­mis­sion’s Gro­cery Re­tail Mar­ket In­quiry panel heard at its pub­lic hear­ings in Dur­ban this week.

The SA Traders’ As­so­ci­a­tion, which rep­re­sents 60 small and medium-sized en­ter­prise (SME) re­tail­ers in KwaZulu-Natal, to­gether with the Chatsworth Cen­tre Ten­ants’ As­so­ci­a­tion, pre­sented its grievances re­gard­ing the ef­fect of na­tional su­per­mar­ket chains in town­ships, peri-ur­ban and ru­ral ar­eas, al­leg­ing that “loose car­tels” had been formed in the re­tail prop­erty sec­tor, dam­ag­ing SME liveli­hoods.

Laven Pillay, a lawyer rep­re­sent­ing the two as­so­ci­a­tions, said more than 80% of the coun­try’s prime shop­ping malls were owned by five listed JSE com­pa­nies – Old Mu­tual Prop­er­ties, San­lam Prop­er­ties, Lib­erty Prop­er­ties, Vuk­ile Prop­erty Fund and Re­de­fine Prop­er­ties.

These com­pa­nies have “cross share­hold­ings” with na­tional re­tail­ers Pick n Pay, Check­ers, Spar, Mass­mart and Wool­worths, which are al­legedly granted more favourable lease agree­ments than small re­tail­ers.

“The su­per­man­age­ment com­pany JHI man­ages the Old Mu­tual, San­lam, Lib­erty and Vuk­ile prop­erty groups. Re­de­fine man­ages its own prop­er­ties,” Pillay said.

“It is there­fore our sub­mis­sion that loose car­tels have been formed.”

Pillay said there was al­most 300 000m2 of shop­ping mall space in town­ship and ru­ral shop­ping cen­tres, with 160 shop­ping malls larger than 30 000m2 na­tion­ally across all ar­eas, com­pared with just 36 in 1994.

“To­day, there is more than 23 mil­lion squared me­tres of in­sti­tu­tion­alised shop­ping cen­tres in South Africa ... Su­per and large re­tail­ers, most of which are listed on the JSE, su­per­fran­chises and na­tional re­tail­ers oc­cupy be­tween 80% and 90% of floor space,” Pillay said.

He claimed that mall own­ers hold­ing shares in na­tional re­tail­ers that were “dom­i­nant” in shop­ping cen­tres was “con­trary” to the Com­pe­ti­tion Act.

Pillay said su­per-re­tail­ers were granted long-term leases of five to 20 years at ben­e­fi­cial rates and, in some cases, were granted “ten­ant in­stal­la­tion” al­lowances rang­ing from R100 000 to mil­lions of rands to set up shop, while SMEs were given three-year leases with no guar­an­tee of re­newal.

“Su­per-re­tail­ers are given low es­ca­la­tions, which range from as low as 1% to the con­sumer price in­dex. The SMEs’ es­ca­la­tions start from 8% and go up to 12%. This cre­ates a com­pounded neg­a­tive ef­fect on SMEs,” Pillay said.

He said su­per-re­tail­ers were not af­fected by “deal creep”, which is when land­lords uni­lat­er­ally change lease con­di­tions.

Pillay added that land­lords could change or can­cel SME leases with short no­tice for re­vamps and they were of­ten re­lo­cated to make way for su­per re­tail­ers.

“Bul­ly­ing within the in­dus­try is in the form of can­cel­la­tion of leases or non­re­newal of leases – the ma­jor­ity of SMEs are of the opin­ion that prob­lems are caused by man­age­ment agen­cies that, from time to time, would not al­low re­newal of leases to force SMEs into higher rates of lease,” Pillay said.

“SMEs are con­cerned that, in the ab­sence of reg­u­la­tion, if the trends con­tinue, SMEs would po­ten­tially lose their liveli­hood to the larger re­tail­ers,” he said.

Pillay called for the com­mis­sion not to fine play­ers if car­tel be­hav­iour could be proved.

“Force the guilty par­ties, namely the land­lords, to re­lin­quish land own­er­ship to SMEs and eq­ui­tably re­dis­tribute the land and prop­erty. The car­tel’s sel­f­reg­u­la­tion by way of con­tracts of lease have can­ni­balised SMEs,” Pillay said.

San­lam came un­der fire at the in­quiry from ten­ants of the Chatsworth Cen­tre in Dur­ban.

Chatsworth Cen­tre Ten­ants’ As­so­ci­a­tion chair Arthur Pal­lium said SMEs that had been in the cen­tre for many years had been “vic­timised”, had uni­lat­eral changes made to leases and some had been forced out to make way for na­tional re­tail­ers that were charged rent of R80 per square me­tre, while SMEs paid up to R900 per square me­tre.

SMEs were also pro­hib­ited in their leases from adapt­ing their busi­nesses to sup­ply new goods and ser­vices, such as cell­phone con­tracts, but na­tional re­tail­ers had no such re­stric­tions.

San­lam Prop­er­ties CEO An­dré Rheeder de­clined to com­ment.

Mum­taz Moola, le­gal con­sul­tant for the SA Prop­erty Own­ers’ As­so­ci­a­tion, which, ac­cord­ing to its web­site, rep­re­sents 90% of the coun­try’s com­mer­cial and in­dus­trial prop­erty com­pa­nies, said the as­so­ci­a­tion had com­mit­ted to “a more vi­brant glob­ally com­pet­i­tive in­dus­try”, and re­ferred ques­tions to in­di­vid­ual prop­erty own­ers and re­tail­ers.

Gro­cery Re­tail Mar­ket In­quiry panel chair Pro­fes­sor Hal­ton Chea­dle said com­plaints about ma­jor re­tail­ers af­fect­ing smaller re­tail­ers in town­ships had been raised coun­try­wide. How­ever, he said the pur­pose of the in­quiry was to find out how the mar­ket worked and not to in­ves­ti­gate any al­leged con­tra­ven­tions, al­though mat­ters could be re­ferred to the com­mis­sion for in­ves­ti­ga­tion as they arose.

Africans are em­ployed in the tourism in­dus­try on the con­ti­nent jobs in Africa are cre­ated by the tourism in­dus­try GDP

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