Commission hears how grocery retail giants ‘killed’ a township bakery
Sipho Mabena | 2017-06-05 17:33:00.0
Shoprite (File photo)
Image by: TMG
When Pretoria businessman Noah Msibi opened his bakery in 2010‚ business was booming‚ selling over 1‚000 loaves of bread a day and employed 15 people from where he operates in Saulsville township.
Today the 33-year-old’s bakery‚ Glo Bake‚ barely sells 500 loaves a day‚ had to retrench six employees and the business is fast sinking despite his bread being the cheapest.
In his submission during the first day of the Competition Commission’s inquiry into the grocery retail sector in Pretoria on Monday‚ Msibi put the blame squarely on the emergence of grocery retail giants Shoprite and Pick n Pay.
The demise of his business was compounded by the flooding of the market by foreign-owned shops‚ which he said would not support local businesses.
He explained that there was one Shoprite chain store in the township when he opened his business in 2010 and he was doing good but business started dwindling when two more Shoprite supermarkets and a Pick n’ Pay opened their doors‚ all with a proximity of 10km from his business.
“We are hungry‚ our businesses are closing down. Not that we are failing to run businesses but the market is killing us. In 2015‚ when the (latest) Shoprite opened‚ I lost my entire clientele of bunny chow sellers who used to buy their bread from me‚” Msibi said.
He charges R6.50 for a 600 gram bread and Shoprite charges R7.00 but they go even cheaper‚ down to R6.00 per loaf‚ when they have specials.
Msibi said the biggest advantage the retail giants have was that people would rather go to them as these are in the malls where customers get everything they want at one go and do not mind spending an extra 50 cents.
He said the demise of township businesses was an emotive issue to the point that they even thought of shutting down these establishments.
“A huge bakery that I found operating in the township‚ which employed 20 people‚ closed down in March” he said. The Commission initiated the Grocery Retail Market Inquiry as it has reason to believe that there are features present within this sector that may prevent‚ distort or restrict competition‚ and to pursue the purpose of the Competition Act.
The Commission is looking into four specific objectives: The impact (negative and positive effects) of the entry of national supermarket chains into townships‚ peri-urban areas‚ rural areas and the informal economy; the impact of long term exclusive lease agreements and the role of financiers on competition in the grocery retail sector; the impact of regulations and by-laws on competition in the grocery retail sector as well as the impact of buyer groups and buyer power of purchasers of fast moving consumer goods on competition in the grocery retail sector.