Cape Town - South African spaza shops need to up their game and also need support if they are to survive the double onslaught of national retail chains moving into townships and well-organised immigrant community competitors.
These are the two main factors in what the Grocery Retail Market Inquiry report, released on Monday, referred to as “a shifting competitive environment since the end of apartheid”.
“On the one hand, spaza shops have seen the entry of national retail chains into township areas and on the other, township trading has seen the entry of immigrant community retailers,” said the report .
Competition Commission chairperson Tembinkosi Bonakele said: “Spaza shops that are owned by foreign nationals tend to out compete local owners of spaza shops.”
The report found that: “The tight knit nature of immigrant communities has enabled them to co-operate collectively to bulk purchase and distribute more efficiently and raise credit for new stores. Their trading experience gained in their less concentrated and corporatised retail home markets has also stood in good stead in competing against local small and independent retailers.”
As a result of this changed set-up, the commission found that there was a need for spaza shop owners to improve their skills in bargaining as well as in the procurement process. The commission also recommended that authorities “get rid of information inequalities” in order to improve access to credit finance.
Speaking during the release of the commission’s recommendations in the final report of the inquiry, chairperson of the inquiry Halton Cheadle said: “The thought behind such a programme would be to offer spaza shops with support such as incorporating spaza shops into buyer groups to achieve economies of scale and scope in buying; establish distribution centres in township areas to service spaza shop; facilitate credit access to purchase stock and provide business and financial management training.”
“The supermarkets have made bulk weekly and monthly shopping more accessible for non-urban residents, with the benefits of lower prices and product variety but at the same time they have also eaten into the daily top-up and convenience shopping that characterises the spaza shopping
expedition in townships.”
Meanwhile, the report found that because spaza shops were ideally positioned for small, top-up occasions, being conveniently situated on commuting routes and close to shoppers’ homes, they had survived moves by big retailers into townships and peri-urban areas across South Africa.
Cheadle said: “There is still a role for large supermarkets for the bulk shopping experience, but this should not be to the exclusion of others.”