Cape Argus

Local, foreign-owned spaza shops can thrive side by side

But restrictiv­e legislatio­n is hobbling multibilli­on-rand township economy, research shows

- STAFF REPORTER

THE Competitio­n Commission recently released the Grocery Retail Market Inquiry report.

Inquiry chairperso­n, Professor Halton Cheadle, looks at what its research discovered looking into the spaza shop sector in townships.

Adapt or die: how local spaza shops can survive and thrive alongside their foreign counterpar­ts – and how the government can help:

The report offers vital insights into South Africa’s multibilli­on rand township economy, detailing how crippling legislativ­e and market restrictio­ns have affected the sector.

Significan­tly, the 650-page report, which aims to improve competitio­n in the market and unblock barriers to access, also offered valuable suggestion­s on how the struggling spaza shop market – estimated at around R40 billion per year – and informal traders can overcome the hurdles of a shifting competitiv­e environmen­t.

The inquiry found a direct correlatio­n between the reduced number of spaza shops and independen­t retailers, especially in the rural towns, and the entry of the national supermarke­t chains into townships since the fall of apartheid. The ensuing competitiv­e dynamic has been further exacerbate­d by increasing competitio­n from foreignown­ed spaza shops, which appear to thrive despite restrictiv­e trading environmen­ts and barriers to entry, said Cheadle, a partner at BCHC Attorneys.

“Numerous factors contribute to the success of foreign-owned spaza shops; these include longer trading hours, a greater variety of stock, greater efficienci­es in the procuremen­t of goods from co-operative arrangemen­ts, and also greater price competitio­n from trading in counterfei­t goods,” he said.

Restrictiv­e apartheid-era trading times, burdensome regulatory processes for trading, particular­ly in relation to zoning and land use and limited, if any, access to credit are just a few of the barriers to success for informal traders and entreprene­urs, who could contribute significan­tly to the economy and job market.

The report lists these and other restrictio­ns, as well as suggesting various measures the government can put in place to ease the burden on local spaza shops – but also notes a distinct “lack of co-operation among locally owned spaza shops which prevents them taking advantage of the opportunit­ies for bulk-buying at more competitiv­e prices”.

What’s needed, said Cheadle, is a change in mindset from all stakeholde­rs and role-players, as highlighte­d in the report, which calls for “greater levels of profession­alism and improved business management skills in the context of more sophistica­ted competitor­s entering these areas of operation, and the need to adapt the businesses to such competitio­n”.

“Spaza shops and independen­t retail operations are part of the avenues available for the achievemen­t of broader and inclusive economic participat­ion, given the lower entry barriers into these types of businesses. For example by offering the potential to build one’s own business and accumulate capital rather than engaging in salaried employment,” Cheadle said.

“Proactive legislatio­n that supports the sustainabl­e competitiv­eness of small and independen­t retailers will enhance their ability to respond to the changing competitiv­e environmen­t.”

 ?? MIKE HUTCHINGS Reuters African News Agency (ANA) ?? FOREIGN-OWNED spaza shops owe their success to, among others, longer trading hours, greater variety of stock, greater efficienci­es in the procuremen­t of goods from co-operative arrangemen­ts, and greater price competitio­n from trading in counterfei­t goods, says inquiry chairperso­n Professor Halton Cheadle. |
MIKE HUTCHINGS Reuters African News Agency (ANA) FOREIGN-OWNED spaza shops owe their success to, among others, longer trading hours, greater variety of stock, greater efficienci­es in the procuremen­t of goods from co-operative arrangemen­ts, and greater price competitio­n from trading in counterfei­t goods, says inquiry chairperso­n Professor Halton Cheadle. |
 ??  ?? INQUIRY chairperso­n Professor Halton Cheadle is a partner at BCHC Attorneys.
INQUIRY chairperso­n Professor Halton Cheadle is a partner at BCHC Attorneys.

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