Traders feel pinch with retail giants’ march into townships
Commission hears that turnover taken out of area has devastating effect on economy
The Elite Star Trading Africa (EST Africa) group has expressed shock at South Africa’s four grocery retail giants’ “absurd” denial their move into the townships is harmful to the economies of these areas.
The independent buying group founded in 2007 by an amalgamation of Devland Cash & Carry‚ Yarona Cash & Carry and Hikma Trading made its submissions at the Competition Commission’s public hearings on its inquiry into the country’s grocery retail sector in Pretoria yesterday.
The group’s managing director‚ Louis Greeff‚ said none of the grocery retail giants – Spar‚ Pick n Pay‚ Shoprite and Walmart – could begin to argue that township trading was not under strain and disappearing because of their entry into the market.
“How can they even vaguely try to say it will have very little impact on those small and independent traders? It is‚ to say the least‚ absolutely absurd.”
He said townships had their own economies with a certain amount of available money that could be spent in that geographic area.
Greeff said he could not understand how the grocery retail giants could argue that a trader with no limitations to credit‚ products and finances could move into an area and take R50-million worth of turnover per month out of a small area and have no devastating effects on its economy.
He said the crippling consequences of the grocery retail giants’ march into the townships were there for everyone to see‚ with spaza shops and pavement traders disappearing.
“What happens to the thousands of spaza stores‚ independent retailers and pavement stores? People are now getting better investment by renting out their shops to foreign traders‚” he said.
Greeff, who added that between 50% and 60% of stores in metropolitan areas were foreign-owned, indirectly blamed the xenophobic attacks on the Big Four moving into townships and rural areas.
The commission initiated the Grocery Retail Market Inquiry as it has reason to believe there are features within this sector that may prevent‚ distort or restrict competition.
Entrepreneur Noah Msibi blamed giant retail outlets for the dwindling fortunes of his business. Msibi is the owner of Glo Bake, a seven-year-old business in Atteridgeville which bakes bread and cakes.
“When I opened the business in 2010, I sold 1 000 loaves of bread in a day and each loaf went for R5.
“The price of a loaf has risen to R6 and I’m struggling to even sell 500 loaves in a day.
“I used to employ 15 people. In 2015 I was forced to terminate the employment contracts of nine employees because I could no longer afford to pay them.”
The inquiry will run until March 31 next year.
What happens to the thousands of spaza shops and pavement stores? Louis Greeff MANAGING DIRECTOR OF EST AFRICA