Big four supermarket chains and the Competition Commission want figures on size of small grocers’ contribution to the sector

The four big national supermarket chains will be fighting hard to ensure the Competition Commission inquiry into the grocery retail sector includes detailed figures for the informal and formal segments of the sector.

The figures are so hard to come by that the commission has had to make a special request for submissions that would throw light on the informal economy.

According to the commission, the big four national supermarket chains — Shoprite, Pick n Pay, Spar and Woolworths — have a combined eye-catching 80%-90% of the market.

To be expected in the context of an inquiry by the competition authorities, the 80%-90% market share has raised the hackles of some of the "dominant" players, who argue that this significantly overstates their role in the fuller picture.

The commission’s figures for the national grocery supermarket chains are based on 2014 research by Who Owns Whom and Barclays. The latter estimated the sector to be in the region of R215bn that year.

While the commission provides no data on the size of the independent grocery retail sector, a recent report by Nielsen indicates it could be about R70.5bn of total grocery retail sales of R316.5bn a year.

The report, released in June, discusses the grocery retail sector in terms of modern versus traditional trade.

"At present, SA is home to a total of 2,500 modern trade and 140,000 traditional trade outlets, which contributed towards SA’s annual retail sales (to March 2017) of R316.5bn.

"Of this, urban and rural traditional trade formats accounted for 22.3%, or R70.5bn."

Nielsen’s Esti Prinsloo said that although spending was higher in modern outlets, there was strong sales growth in traditional outlets, with spending in urban independents (mostly spazas) growing at 13.4% in the year to March 2017 and rural outlets growings at 2.3%. Hypermarkets grew 4.8% and supermarkets 8.6%.

She said spazas were not the only channel in the traditional trade format, which included small independent grocers, self-service walk-in outlets and counter-top formats. "People are reverting back to local as they are not willing to travel to supermarkets due to the rising cost of transport. They’re looking for stores in close proximity to where they live or commute."

One of the five objectives of the Competition Commission’s inquiry is to determine the effect of the expansion, diversification and consolidation of the national supermarket chains on small and independent retailers in townships, peri-urban areas and rural areas as well as the informal economy.

The commission says the 80%-90% share held by the four largest chains has been achieved through organic expansion and acquisitions of small independent retailers.

However, it acknowledges the discrepancy between the Nielsen data and the Barclays figures. "Some researchers have hinted at a ‘rebirth’ of profitable and sustainable independent retail outlets", while others report a decline in informal and independent retailers because of the move by larger formal retailers into the informal sector.

The commission has called for submissions on the lack of clarity about what is happening in the informal grocery sector.