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
Brother of man who died in Kuga opens up on air, discusses lawsuit against Ford

Brother of man who died in Kuga opens up on air, discusses lawsuit against Ford

John Maytham interviews Kaveen Jimmy; who says he has damning evidence against Ford.

Firefighters continue to battle the devastating Vredehoek fire

Firefighters continue to battle the devastating Vredehoek fire

It is reported that some structures were burned down. Residents have been evacuated with the help of police.

Cape Town dam levels could reach 20% by the start of rainy season

Cape Town dam levels could reach 20% by the start of rainy season

Heavy water restrictions will be implemented if high consumption continues.

'My daughter bought Spur shares when she was 10 years old' - Dr Adrian Saville

'My daughter bought Spur shares when she was 10 years old' - Dr Adrian Saville

What does Citadel’s famed disciple of contrarian, deep-value investing Dr Adrian Saville hope for (and fear) about money?

Trump bio ‘unlocks extraordinary personality and terrifying political leader’

Trump bio ‘unlocks extraordinary personality and terrifying political leader’

Bruce Whitfield interviews J Brooks Spector, Daily Maverick’s expert on all things American, for his weekly business book review.

3 stocks that’ll boost your wealth this January (by Herenya Capital Advisors)

3 stocks that’ll boost your wealth this January (by Herenya Capital Advisors)

Looking for great investments? Herenya Capital Advisors’ Petri Redelinghuys says you need not look further than these three…

‘3 richest South Africans have wealth equal to the poorest 28 million’ – Oxfam

‘3 richest South Africans have wealth equal to the poorest 28 million’ – Oxfam

The Free Market Foundation's Leon Louw, however, calls Oxfam "OxScam" and says the organisation does not care about poor people.