Louis Greeff, the MD of independent buying group Elite Star Trading Africa, accused Pick n Pay, Shoprite, Spar and Massmart of profiteering from smaller independent players in the townships. In his submission to the commission, Greeff claimed that the "big four" retailers each made profit of about R50m a year from the townships.
"There's a structural flaw in retail trading in SA, which has made the 'big four' too big, leaving independent stores [with] little leverage," said Greeff.
He said spaza shops in townships were disappearing as a result of the infiltration of the formalised retail players, which were taking market share. Greeff claimed that retailers such as Pick n Pay and Massmart sold products at lower margins to independent wholesalers than they did in their stores, implying that "retailing in SA is about your ability to be price competitive".
The retail market inquiry was set up by Economic Development Minister Ebrahim Patel in 2015 to understand the dynamics within the retail sector and to assess competition among retailers.
It was tasked with looking at the effect of national supermarket chains on townships, peri-urban areas, rural areas and the informal economy. This included exclusivity leases, regulations and by-laws on competition in the grocery sector and the effect of buyer groups and buyer power on fast-moving consumer goods in the grocery sector.
Lulama Mtanga, a panellist for the inquiry, led the hearings on Monday in the absence of the chairman, Halton Cheadle. Mtanga said the inquiry was not meant to be a witch hunt. Its objective was not to make findings of harm but to understand how the retail sector worked.
She said that information was gathered through stakeholder engagement and visits to urban and peri-urban sites, which included meetings with owners of small and independent businesses. "The finding will make recommendations to the minister of economic development for regulations and the minister will present the findings in Parliament," said Mtanga.
The inquiry into the sector is due to continue throughout the week. The next round of hearings is expected to take place in KwaZulu-Natal from 3 July to 7 July.
Source: Business Day
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