Spaza shops, greengrocers, butcheries and smaller supermarkets in non-urban areas have received a major competition boost against retail giant Shoprite.
The Competition Commission and Shoprite announced a landmark consent agreement on Monday.
More access to leasing space
The agreement gives SMMEs greater access to leasing space at shopping centres in non-urban areas where Shoprite stores are located.
According to the agreement, Shoprite will stop imposing exclusivity provisions in its longterm lease agreements with landlords in such areas.
Such provisions prevented SMMEs from setting up stores near Shoprite in townships and areas outside towns and cities.
The Competition Commission confirmed the agreement on Tuesday. It said, “A list of more than 400 Shoprite stores in non-urban areas is included in the consent agreement.
“Shoprite stores located in urban areas will face the same restrictions, except that they will be permitted to phase out the enforcement of exclusivity provisions against other supermarket chains within five years.”
The agreement comes after the 2019 Grocery Retail Market Inquiry (GRMI) report recommended the phasing out of exclusivity clauses in longterm lease agreements in the grocery retail sector.
The report found that such clauses stifled competition in the sector. It therefore called for voluntary compliance from large retailers such as the Shoprite group.
A Shoprite plan to increase the number of its smaller stores in the townships and rural areas also sparked some debate when it emerged last year.
The plan involved housing Usave eKasi stores in containers in a way that is almost similar to the traditional spaza shops.
Some argued that the retailer was attempting to dominate township and rural economies and edge out small spaza shop owners.
However, others argued that the plan would create more jobs in the townships and increase the government’s tax revenue.