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:

Read More
Recognising the experience of women in South African mines

Recognising the experience of women in South African mines

Dr Asanda Benya has done work to put under the spotlight the role of women in the occupational culture of South African mines.

Broadening the taste of Khayelitsha's spinach revolution

Broadening the taste of Khayelitsha's spinach revolution

Espinaca Innovations founder Lufefe Nomjana describes how he has grown his bakery business which produces goods made from spinach.

Makhamisa keeps mouths open with its distinctly Mzansi sauces

Makhamisa keeps mouths open with its distinctly Mzansi sauces

Terence Leluma describes the entrepreneurial journey of Makhamisa Foods which has introduced a proudly South African brand of sauces.

Developing future leaders for a stronger Africa

Developing future leaders for a stronger Africa

The African Leadership Academy works to strengthen Africa by developing the next generation of leaders.

Adding quality and ubuntu to local healthcare

Adding quality and ubuntu to local healthcare

Dr Nthabiseng Legoete describes the work of Quali Health, which provides quality and affordable healthcare in Diepsloot.

Afro Botanics turning good hair into great hair

Afro Botanics turning good hair into great hair

Ntombenhle Khathwane describes Afro Botanics' growth as a business which produces quality natural hair products.

Popular articles
The rand is on a rampage

The rand is on a rampage

The rand is going from strength to strength. The Money Show’s Bruce Whitfield interviews Treasury One’s Andre Cilliers.

[CARTOON] Poephol With a Taste For Strife

[CARTOON] Poephol With a Taste For Strife

EWN's Dr Jack & Curtis take a look at the Spur confrontation that has taken the country by a storm.

No escaping the tax man even if you work outside SA

No escaping the tax man even if you work outside SA

Government is intending to change the way foreign income is taxed by introducing taxes to a large South African diaspora.

Opinion: Social housing in Sea Point won't collapse your world! - John Maytham

Opinion: Social housing in Sea Point won't collapse your world! - John Maytham

Social housing in Sea Point will house the very people who you are happy to have look after your kids & serve you in restaurants.

Sale of Tafelberg gets green-light from Cape Town City

Sale of Tafelberg gets green-light from Cape Town City

Despite months of protests and lobbying, affordable housing and redevelopment finally lose the battle for Tafelberg site.

Opinion: Laying equal blame on parents in Spur spat is wrong says Eusebius

Opinion: Laying equal blame on parents in Spur spat is wrong says Eusebius

He believes it's a moral cop-out to say the only thing going on in the video is two adults behaving badly in front of the kids.

Is Uber dying? Stuff’s editor explains…

Is Uber dying? Stuff’s editor explains…

High ranking employees are resigning en masse as crisis upon crisis pummel lossmaking Uber.

Spur tightens its belt as 'two for the price of one' Monday burger special ends

Spur tightens its belt as 'two for the price of one' Monday burger special ends

The CEO of Spur says food inflation has played a big role in making this difficult decision.