GROCERY SECTOR
Suppliers at a huge disadvantage when dealing with supermarkets
Big four food retailers control most of the market and determine who is able to enter the product supply chain
For the past two months, the Competition Commission has been investigating the retail grocery industry. The big four supermarkets — Pick n Pay, Shoprite Checkers, Woolworths and Spar — control almost the entire grocery retail market. The investigation focused on the effect of this monopoly on smaller retailers. But there are other casualties too: their small and medium-sized suppliers. Over the past 15 years, the big four’s total market share of food retail has increased from about 60% to more than 90%. It is unclear whether this monopoly benefits consumers, but one thing is clear: black-and white-owned small suppliers are subjected to egregious contractual terms, which has implications for their survival, for entrants to the sector and for job creation. A survey and in-depth interviews with 26 small and medium-sized suppliers shows that unless suppliers have a strong independent brand, they are simply competing with other suppliers for shelf space and are dispensable. As one put it...
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