A time of peril and opportunity for township traders
We stand on the brink of a global technological revolution that will fundamentally alter the way we do business.
Given the tension between small traders in historically black townships and retailers who "encroach on their turf", and the impact disruptive technologies are expected to have on the retail business ecosystem, ill-timed interventions by competition authorities may have unintended consequences for small business competitiveness.
Let me explain.
Modern-day consumers are more connected, informed, discerning and empowered than ever before. As a result, their expectations and demands are rising rapidly.
The South African retail industry will undergo fundamental and drastic changes in the next decade as it strives to keep pace with today's rapidly changing retail environment.Despite continued growth in consumer spending, the future of brick-and-mortar retail establishments, particularly in black areas, is gradually coming under increasing pressure.
The vexing question is: how do "vulnerable" black traders and small independent retailers respond to the threats and opportunities presented by the fourth industrial revolution?
It is important to note that prior to 1994, traders that operated in black townships survived due largely to limited choices for consumers in those markets. This has all changed.
The foray by supermarket chains and other stores into black areas presents both threats and opportunities for local black traders. Traders and independent retailers must re-examine the way they do business.
A key global trend in the retail industry is the development and diffusion of technology-enabled platforms that combine demand and supply to disrupt existing industry structures.
Some local traders may, for instance, need to change their business and operating models to include integration into supply chain systems of national retailers if they are to endure.It is unlikely that consolidation, expansion or diversification by national supermarkets will severely affect the majority of spaza shops as these operations are generally designed for convenient replenishment of small grocery items.
It may, however, affect the ability of small, independent retailers in these areas to remain viable or expand their operations.
The findings of a current inquiry by the Competition Commission into the local retail industry are expected to inform recommendations to be made by Minister of Economic Development Ebrahim Patel.
Perhaps the most jarring criticism of the minister is that, in his ministry's role as government representative, he tacitly aided and abetted the Walmart-Massmart supplier development fund to subvert the objectives of the Competition Appeal Court's order.
Ironically, it was the selfsame Massmart that complained to the commission about the anti-competitiveness of exclusivity clauses in lease agreements entered into between property developers and its competitors.
Massmart itself stands accused of not fully complying with the order that it, inter alia, integrate SMMEs from historically disadvantaged backgrounds into its supply chain.
The natural attrition or displacement of township traders by new entrants, while regrettable, is arguably a consequence of normal economic arbitrage and not necessarily due to exogenous anti-competitive forces.It would, accordingly, be undesirable for the commission to protect inefficient small businesses unwilling to adapt to the changing retail ecosystem or take advantage of opportunities presented by the advent of the fourth industrial revolution.
Finally, it is imperative that big retailers and manufacturers play a more proactive and meaningful role in shaping an inclusive economic future that works for all.
Otherwise, there has never been a time of greater opportunity or potential peril than that which South African SMMEs currently face.
Khaas is president of the South African SMME Forum and past chairman and current member of the Walmart-Massmart Supplier Development Advisory Board. Follow him on Twitter @tebogokhaas..