In the next two weeks Reid Corin, an attorney, will be making submissions to the Competition Commission on behalf of the SA Council of Retailers against the owners of the V&A Waterfront and Tyger Valley shopping centres, among others.
Marcel Joubert, chairman of the SA Council of Retailers and CEO of Platinum Holdings, which owns clothing retail brands Jenni Button, Hilton Weiner, Aca Joe and Vertigo, said the crux of the issue is the monopolised concentration of shopping mall ownership, with only six to 10 shopping centre owners in South Africa.
"In the 1960s there was only 100 000m2 of institutional shopping centre space. CBDs were thriving, vibrant places with healthy, fragmented ownership of retail space, spread over tens of thousands of landlords. Today there is five million square metres of institutional shopping centre space controlled by a handful of players. This has all but killed CBDs across the country, displacing control from the hands of many in the 1960s into the hands of few today.
"This concentrated ownership is routinely abused by the established interests ... to the extreme prejudice of the smaller traders, who end up subsidising the rentals of the majors, paying exorbitant rentals so that the majors can enjoy highly preferential subsidised rentals.
"The smaller 'mom 'n' pop' tenants pay base rentals of up to R500/m2, while major retailers right next door to them pay mere 'penny rents' of as little as R20/m2," said Joubert.
"The 'mom 'n' pops' pay turnover rentals of as much as 12% of their sales, while the major established retailers pay heavily reduced turnover rentals as low as 1% of their sales, or in cases even zero
"It's not difficult to understand why 95% of all 'mom 'n' pops' fail at R500/m2 and 12% turnover rent - or how large concerns manage to report 'profits' of R400 million at R30/m2 and 2% turnover rent," says Joubert.
"The SA Council of Retailers believes this conduct to constitute excessive pricing, price discrimination, abuse of dominant position and exclusionary conduct. These practices are prohibited in terms of the Competition Act. The act aims to create frictionless markets with equal opportunity and no barriers to entry."
Johan Venter, manager of the Tyger Valley Shopping Centre, declined to comment.
Maureen Thompson, executive marketing manager of the V&A Waterfront, said the relationship between tenants in a shopping mall was complex.
"You need major retailers in a centre to be a drawcard," she said. "They spend a great deal of money on marketing, which draws people to the centre and has a positive spinoff for the line shops."
The "majors" also carried a lot more non-trading area than the smaller tenants, who had a higher trading density, or turnover per square metre.
Thompson said the V&A Waterfront management began consultations with tenants long before their leases were due for renewal to explore ways of improving their businesses.
"The better the tenant does, the better the whole centre does." - Graham Norris, Cape Argus
Publisher: Business Report
Source: Business Report
