Inquiry shakes up the grocery retail sector market
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.
The purpose of the Inquiry was to assess:
The impact of the expansion, diversification and consolidation of national supermarket chains on small and independent retailers in townships, peri-urban areas and rural areas and the informal economy.
The impact of long-term exclusive lease agreements entered into between property developers and national supermarket chains, and the role of financiers in these agreements on local competition in the grocery retail sector.
The impact of the dynamics of competition between local and foreign national operated small and independent retailers in townships, peri-urban areas, rural areas and the informal economy on competition.
The impact of regulations, including, inter alia, municipal town planning and by-laws on small and independent retailers in townships, peri-urban areas, rural areas and the informal economy.
The impact of buyer groups and buyer power of the national retail chains on small and independent retailers in townships, peri-urban areas, rural areas and the informal economy.
The impact of certain identified value chains on the operations of small and independent retailers.
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