The grocery retail sector market inquiry preliminary report on exclusive lease agreements

On 30 October 2015, the Competition Commission established the Grocery Retail Sector Market Inquiry (the “Inquiry”) with the purpose to assess amongst others, the impact of long-term lease agreements entered between property developers and national supermarket chains. 4 years on, the Inquiry has published preliminary findings and recommendations.

The Inquiry has reported that certain existing features in the grocery retail sector distort competition between national supermarket chains, wholesalers and independent retailers. In particular, the significant buying power that national supermarket chains wield over property developers and suppliers places them in a strong position to influence the terms of agreements by demanding exclusive leases, low rentals, and rebates which only they qualify for. Chains reviewed by the Inquiry include Shoprite, Pick n Pay, Woolworths, and Spar.

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Service franchises can help fix that appliance, renovate, waterproof and repair


Are you one of those homeowners that urgently needs something fixed around the home but are at a loss as to where to find a reliable repair company? If you belong to one of the many suburban whatsapp groups, you could post your dilemma online but then get inundated with offers of assistance from both individuals and companies vying for your business. Whilst you might get a good referral there are also fly-by-night operators who trawl these groups waiting to scam unsuspecting homeowners.

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Inquiry shakes up the grocery retail sector market

grocery retail

Since establishing the Grocery Retail Sector Market Inquiry in October 2015, the Competition Commission finally made public its findings which looked into key areas of concern in the grocery retail sector. It found features that ‘may prevent, distort and restrict competition’ effectively excluding widespread participation in the retail sector where barriers to entry should be low and participation possible. These relate to:

  • the use of long-term exclusive lease agreements and the exercise of buyer power by the national supermarket chains;
  • the inability of small and independent retailers, particularly spaza shops to adapt to a changing competitive environment; and
  • the lack of a pro-competitive regulatory regime that is aligned with the convenience model associated with small and independent retailers.

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Second-hand clothing sector spawns franchise retail fashion opportunity

Secondhand clothing fashion

Research by McKinsey State of Fashion shows that more than half of fast-fashion items are thrown away in less than a year, with 11 million clothing items a week (or 300 000 tonnes a year) in the UK alone landing up in landfills. The answer, it seems, is to never put clothes in the bin and rather, like FASA member 2nd Take, turn it into a successful franchise.

Gumtree SA reports having more than 20 000 items of clothing listed on their site and their survey shows that 65% of responders have ten or more items in their wardrobe that they never wear. Globally, the 2nd hand market is becoming the largest growing consumer sectors. Even designers like Stella McCartney launched an initiative called ‘The future of fashion is circular’ – promoting the purchase of sustainable quality clothing that retains its value and can then be resold to expand its lifespan, avoiding landfill or an incinerator.

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