The arrival of mass-market retailers at new shopping malls in townships is making life difficult for SA's informal traders. Unless something is done, job losses are inevitable and these communities will begin to lose some of the wealth that has been built up over many years.

According to the Bureau for Market Research, informal, survivalist business generated roughly R52bn in turnover in 2004, of which R32bn was made up of retail sales from 750 000 informal outlets like spaza shops and hawkers.This compares well with the 2004/ 2005 turnover of Pick 'n Pay at R32bn and Shoprite's R27bn - SA's two largest chain store groups. These two groups are now entering the townships in a big way. WHAT IT MEANS growth for retailers is in the townships Spaza shops need to revamp their business.

Lawrence Mavundla, president of the African Co-operative for Hawkers & Informal Businesses (Achib), estimates that about 150 informal retail stores in Soweto have closed in recent years, thanks in part to the inroads being made by large retail chains. "They started on the periphery with malls at Eastgate, Highgate and Langlaagte, but in the past five years we've seen the emergence of at least four Shoprites and eight Pick 'n Pay Score supermarkets in Soweto," he says. Achib estimates that about 1 500 jobs have been lost in Soweto as a result and that thousands more could be lost nationwide once the big retail chains have completed their expansion plans.

Pick 'n Pay has a different perspective. In September last year the Pick 'n Pay Soshanguve Family Store opened near Pretoria as a franchise under George Senosha, a former Pick 'n Pay store manager, now the group's first black economic empowerment franchisee. The store's subsequent success lies partly in Senosha's commitment to purchase produce from the local farmers. Pick 'n Pay, through the Ackerman Foundation, donated R300 000 for drilling boreholes to provide water for these farmers, who also received training. Donations were made to local orphanages and creches.

With the food offering tailored to suit local needs, and with good quality and competitive pricing, it is hardly surprising that Pick 'n Pay Soshanguve has become the preferred retail store in the area. Pick 'n Pay has about 100 stores in predominantly black areas, and CE-designate Nick Badminton says a "significant portion" of the group's expansion over the next few years will be into similar areas. For the consumer, access to the modern retailing infrastructure of the large chain stores means wider choice at lower prices.

On the other hand, business consultant J J Viljoen points out that the informal sector forms the economic foundation of many black communities, with the profits being circulated within the township and supporting downstream industries. Informal trading is also one of SA's biggest employment creators. Stats SA's Labour Force Survey shows that in the year to September 2005, 35% of all the new jobs created (232 000 jobs out of a total of 658 000) were for street hawkers and other forms of informal retail trade. "It would be an economic disaster if we were to lose these traders," says Viljoen, who is helping Achib create a support programme for the sector, which has the backing of government and the Industrial Development Trust.

"The difficulty in the townships is that people have to use expensive taxis. Spaza shops and hawkers are close and convenient, so if they could compete on quality, price and service, there's no reason they w ouldn't be viable," says Viljoen.  Achib's initiative to safeguard the livelihoods of the 137 000 hawkers it counts as members has been to become a co-operative so that it can purchase as a single entity on their behalf. The idea is to create a network of branded MyStore Co-operatives in townships, owned by entrepreneurs, that
will act as wholesalers to the retailers in the group. By creating a large national buying organisation that delivers stock to centrally located MyStores, Achib believes it can reduce retailers' costs by about 10%.

Spaza shops and retail stores will be able to brand themselves as Neighbourhood Co-operative Stores. The intention is to have 54 co-operative wholesalers and 15 000 co-operative retailers up and running nationwide within three years. Hawkers will be able to brand themselves as R3 Co-operative Stores but, whereas they tend to sell fruit and vegetables, in future they will be able to use their Achib links to diversify into nonperishables, clothing, toiletries and a range of cheap Achib branded products.

"Our members' biggest problem is their lack of business and retail merchandising knowledge, which includes a lack of access to finance, and their inability to get volume discounts from wholesalers," Mavundla says. Each member will also be given a R5 000 credit line to buy stock at MyStore Co-operatives as well as secure overnight storage facilities. "We're not going to get this thing running overnight but we believe we can create 220 000 sustainable jobs in three years," says Mavundla.

Sonny Boy Nsukwini, a hawker near Johannesburg's Park Station, confirms that business has fallen off since the big retail chains came to Soweto, but is excited about the Achib project because "it's going to make even the hawkers powerful now". "We are going to get goods cheaper and they're going to make my shop look better," he says. "The training is there and after the training you're given credit. It's going to make our lives better."

His views are echoed by Daniel Macheke, who has been running a fast-food and retail store at Park Station since 2000. He says he'll save R150/day in transport costs as a result of Achib's intention to establish big wholesalers around the station. Viljoen is also working towards the development of a network of small butcheries and bakeries. "With the right support, we believe this is doable," he says.