OBC Chicken & Meat was one of the companies that made their submission to the Competition Commission on the power wielded by the major national supermarket chains over enforcing exclusive provisions in their lease agreements against challenger retailers and speciality stores. It welcomes the preliminary findings and will be submitting its comments to the Commission.
According to MD, Tony Da Fonseca, OBC was one of the first independent chicken and complementary products franchise retailers to set up supermarkets in townships, taxi ranks and rural areas over thirty years ago offering consistent quality, competitive prices and convenience. “At a time when the major supermarket retailers were not even considering entering peri-urban and rural areas, we were catering to local communities becoming famous as the ‘chicken ekhaya’ of choice and working with and supplying local spaza and informal traders.”
“Once the big players in the retail supermarket arena discovered the potential of trading in high density areas, we experienced the ‘blocking’ of sites by these anchor tenants who flexed their muscles in having a say on the tenant mix in these new centres. Not only are these anchor retailers trying to block large rival brands from infringing on their territory with their long-term leases, they are also effectively wiping out even the small challenger retailers like ourselves.”
“We experienced multiple cases when positive negotiations with landlords were suddenly reneged on for no reason whatsoever, despite the fact that we add value to a centre by being a ‘sub/secondary’ anchor in what would normally be a quieter section of a mall or centre. The ramifications of this, says Da Fonseca, is that smaller and independent traders, ranging from fashion, prepared foods to furniture end up in a situation where they alone cannot draw the feet OBC can to a quiet section, adversely affecting their ability to trade profitably. This is proving to have larger implications to traders than simply ‘blocking’ OBC.”
OBC’s investment in the communities it serves goes back decades and there has always been a strong symbiotic relationship with the informal sector that plays such an important role in township life. Not only does OBC offer special deals and even ad hoc storage facilities to the informal traders that operate alongside them but have reached out a supporting hand to those family businesses, like local butchers who have been threatened by closure on the back of the big retailers’ aggressive pricing and margins, to partner with OBC and benefit from its distribution support, speed to market, product innovation and marketing muscle.
“The stifling of local entrepreneurship – be it on any level – has no place in our country and we all need to play a role in making room for a variety of commercial and informal enterprises that cater to our rainbow nation.” concludes Da Fonseca.
Prior to joining OBC Chicken & Meat in the post of CEO in 2008, Da Fonseca held the position of Managing Director at DDB South Africa, the local subsidiary of global communication giant DDB, where OBC was a client. During his 14 years with DDB, Da Fonseca was exposed to the workings of numerous international accounts and to best brand practices from around the world. However, being a trader at heart, Da Fonseca had always wanted to develop a brand that would eventually evolve into a household name. Taking up the reigns at OBC, a business serving the lower- to middle income categories of the consumer goods market where the biggest challenges and the real growth lay, was exactly such an opportunity and he has not looked back since. Realising the true potential of the business, he introduced professional retail and management techniques, rejuvenated the Franchise Division and developed the brand into one of the fastest growing businesses in the lower-end FMCG space.