Retailing’s ‘big four’ under scrutiny by Competition Commission
The founder of small retailing business, Soweto Brands, says the four leading retailers won’t even give his products a trial run
The "big four" grocery retail stores should no longer be allowed to have divisions selling a variety of unrelated products, says Panichi Gundo‚ the founder of Soweto Brands.
In his submission on the first day of the Competition Commission’s Grocery Retail Market Inquiry, which is taking place in Johannesburg‚ Gundo said it was unfair for the four — Spar‚ Shoprite‚ Pick n Pay and Massmart — to have divisions selling food‚ clothes‚ medicine‚ liquor and hardware‚ and manufacturing their in-house brands, among other things.
Soweto Brands, which was founded in 2014‚ manufactures fast-moving consumer goods, such as soap powder and dishwashing liquid‚ and has been distributing its products to spaza shops since February.
Gundo has found his business having to compete with the big four and that it has proved difficult to supply his goods to the retail giants. He said some of the retailers have sent him from pillar to post, while others are not willing to give his products a trial run in their stores.
The inquiry is looking at the impact of the dominance the big four has in the retail sector.
Gundo says the rivalry between the four is close to non-existent in townships. "If you find there is a Shoprite in a mall you will not find another store from the [four]; it is like subtle collusion. There is a marriage of convenience between them‚" he said, adding that the alleged anti-competitive behaviour by the giant retailers is stifling innovation‚ especially relating to manufacturing.
"Even if you are innovative and come with a new product‚ where are you going to sell it? If you are Zulu‚ [a representative of a big supermarket chain] will tell you that Zulus are difficult to deal with and they can’t work with you."
He was also scathing when it came to supplier development programmes run by some of the big four‚ saying they only benefit a few black companies.
Gundo advised the commission to come up with regulations that will make the tender system of the four transparent: "There is also a need for a thorough investigation and analysis on how prices develop from the producer to the [big four] shops."