Township businesses take knocks

Competition inquiry told of retail giants’ negative effect on small operators

WHEN Pretoria businessman Noah Msibi opened his bakery in 2010‚ business was booming. He was selling more than 1 000 loaves of bread a day and employed 15 people from where he operates in Saulsville township.

Today the 33-year-old’s bakery‚ Glo Bake‚ barely sells 500 loaves a day and has had to retrench six employees. The business is fast sinking despite its bread being the cheapest.

In his submission during the first day of the Competition Commission’s inquiry into the grocery retail sector in Pretoria yesterday, Msibi put the blame squarely on the emergence of grocery retail giants Shoprite and Pick n Pay in the area.

The demise of his business was compounded by the flooding of the market by foreignowned shops‚ which he said would not support local businesses.

He explained that there was one Shoprite chain store in the township when he opened his business in 2010 and was doing well.

Business started dwindling when two more Shoprite stores and a Pick n Pay opened their doors‚ all within 10km of his business.

“We are hungry‚ our businesses are closing down. [It’s] not that we are failing to run businesses but the market is killing us,” he said.

“In 2015‚ when the [latest] Shoprite opened‚ I lost my entire clientele of bunny chow sellers who used to buy their bread from me.” Msibi charges R6.50 for a 600g loaf of bread. Shoprite charges R7 but goes down to R6 a loaf when it has specials.

He said the biggest advantage the retail giants had was that they were in malls, where customers could get everything they wanted in one go and did not mind spending an extra 50c.

He said the demise of township businesses was an emotive issue to the point that they thought of closing these establishments.

“A huge bakery that I found operating in the township‚ which employed 20 people‚ closed down in March,” he said.

The commission initiated the Grocery Retail Market Inquiry as it has reason to believe there are features present within this sector that may prevent‚ distort or restrict competition‚ and to pursue the purpose of the Competition Act.

It is looking into four specific objectives:

The impact (negative and positive) of the entry of national supermarket chains into townships‚ peri-urban areas‚ rural areas and the informal economy;

The impact of long-term exclusive lease agreements and the role of financiers on competition in the grocery retail sector;

The impact of regulations and bylaws on competition in the grocery retail sector; and

The impact of buyer groups and buyer power of purchasers of fast-moving consumer goods on competition in the grocery retail sector.