Competition Commission goes after four big supermarket chains

The Competition Commission has recommended an immediate end to long-term exclusive lease agreements at shopping malls for the big four supermarket chains.

The Grocery Retail Market Inquiry report probed the multi-billion rand grocery retail sector which they began back in 2015.

The commission expressed its concerns about exclusive lease agreements between Shoprite, Pick n Pay, Spar, Woolworths and shopping mall landlords.

The report revealed that the leases with the supermarket are between 20 and 40 years effectively freezing out any up and coming retailers or smaller operations.

Most of the large retailers you will find that, for example, the Shoprite group and Pick n Pay, you will hardly find those two in the same shopping mall or Checkers and Pick n Pay.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

Sometimes they coexist with a Woolworths store and that is because they have determined that such a format is distinguishable from theirs but where you see two formats, it is a recent phenomenon as a result of our intervention.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

Bonakele says Fruit and Veg and Food Lovers Market have also been excluded.

They exclude all sorts of formats, sometimes you even fail to follow the logic. Clearly a large retailer anchor tenant doesn't want a similar shoer next to it. They would ever specify they don't want speciality stores next to them.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

He adds that property developers don't require anchor tenants.

We have spoken to all stakeholder in the sector including property developers and none of them requires this. It is the retailers who tell the property developers they will be anchor tenants and don't want the competition.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

Bonakele says the report also looked into spaza shops and the growth of immigrant community retailers.

The entry of these large retailers into townships is a real concern as the spaza shops are not able to compete with the retailers.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

There are also spaza shops that are owned by foreign nationals which tend to also outcompete local owners of spaza shops.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

The biggest hindrance for spaza shops in the townships is crime.

Tembinkosi Bonakele, Commissioner - South African Competition Commission

Read the full report HERE

Listen to the full interview below...


This article first appeared on CapeTalk : Competition Commission goes after four big supermarket chains


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