New entrants struggling to break into South Africa's retail industry

Multiple barriers to entry need to be looked at to make it easier for new entrants to break into South Africa's retail industry.

This is according to a study by the Centre for Competition, Regulation and Economic Development (CCRED) at the University of Johannesburg, which finds that the country's big and long-established retail chains hold over 70% of the country's retail market share.

If you look at the experiences of new entrants such as Fruit & Veg City, the entry of these triggers brings about huge benefits for suppliers into the supermarket value chain, as well as for consumers

Reena das Nair, Senior Researcher at the Centre for Competition, Regulation and Economic Development at the University of Johannesburg (UJ)

Reena das Nair, Senior Researcher at the CCRED, says that newer businesses such as Fruit & Veg have shown the value a new entrant can have in the country's retail industry for both suppliers and consumers, but still face obstacles which appear to be to the benefit of bigger retail chains.

Historically in South Africa, the conduct where your incumbent supermarkets, your powerful supermarkets that have been around for a really long time, history the conduct is that they enter into leases with property developers or property owners, and these leases contain exclusive clauses, and these clauses which specifically stipulate that new entrants cannot locate in the same shopping mall or the same shopping centre for a given amount of time. Usually that amount of time is the duration of the lease

Reena das Nair, Senior Researcher at the Centre for Competition, Regulation and Economic Development at UJ

Das Nair says that new entrants face economic and systematic barriers to entry in the local retail space.

She says that it is wasteful to simply give new entrants finances to startup without working out how to overcome these barriers to entry.

It is very important when we're looking at participation in the economy, that we look at it holistically. We don't just throw money at new entrants, because just giving them finance, we're not trying to address other barriers to entry such as exclusive clauses

Reena das Nair, Senior Researcher at the Centre for Competition, Regulation and Economic Development at UJ

Listen to the conversation below:


Recommended

by NEWSROOM AI
Read More
#Strideforgood pledges for an abuse-free society

#Strideforgood pledges for an abuse-free society

Johnnie Walker and civic groups gathered at the Nelson Mandela Bridge to call for an end to abuse against women and children

Striding Men Rally makes strides for no violence against women and children

Striding Men Rally makes strides for no violence against women and children

On Saturday, Johnnie Walker Striding Men and several city society formations will march on Nelson Mandela bridge, in support of an abuse-free society.

Driving investment and creating jobs through InvestSA's One Stop Shops

Driving investment and creating jobs through InvestSA's One Stop Shops

InvestSA has launched its latest One Stop Shop in KwaZulu Natal, bringing hope for more investment and services being available to citizens.

Understanding the importance of living within your means

Understanding the importance of living within your means

In this week's #BeFinanciallySmart feature, FNB's Eunice Sibiya discusses the importance of living within your means.

How you can #BeFinanciallySmart and save for those big days!

How you can #BeFinanciallySmart and save for those big days!

FNB's Eunice Sibiya discusses how you can save for important annual events.

'Haiti is the missing piece in the AU'

'Haiti is the missing piece in the AU'

Ambassador of Haiti to South Africa Jacques Baril describes Haiti's historic relationship with the African continent.

Popular articles
[WATCH] Mabena's lack of agility has social media in stitches, we are Mabena!

[WATCH] Mabena's lack of agility has social media in stitches, we are Mabena!

Khabazela shares tweets and Facebook posts that have gone viral.

[WATCH] Beyoncé's side-eye leads Beyhive to bully NBA team owner's wife

[WATCH] Beyoncé's side-eye leads Beyhive to bully NBA team owner's wife

Khabazela shares tweets and Facebook posts that have gone viral.

Your employer can ask your doctor to write an affidavit to support a sick note

Your employer can ask your doctor to write an affidavit to support a sick note

Law says if a traditional healer is part of medical council with a registered number he or she can write a medical certificate.

South Africans are getting poorer and poorer at an increasing rate

South Africans are getting poorer and poorer at an increasing rate

Bruce Whitfield interviews Mike Schussler (Economists.Co.Za), Busisiwe Radebe (Nedbank) and Edward Kieswetter (Sars).

[WATCH] 400-metre hurdle race goes viral as athlete dives through finish line

[WATCH] 400-metre hurdle race goes viral as athlete dives through finish line

Khabazela shares tweets and Facebook posts that have gone viral.

Meet Sandile Shabalala, CEO of black-owned and controlled TymeBank

Meet Sandile Shabalala, CEO of black-owned and controlled TymeBank

TymeBank has no branches and no monthly fees. Most transactions are free. Bruce Whitfield interviews its CEO.