Supermarket chains eye townships

Posted On Monday, 21 January 2002 14:01 Published by
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Supermarket chains have ended their neglect of the lower end of the retail market by moving into black townships.
By Larry Claasen

Supermarket chains have ended their neglect of the lower end of the retail market by moving into black townships.

Analyst have long felt that supermarket chains that focus on the lower end of the market must be located closer to these to the homes of these consumers, as shopping in the city centres or at malls had transport eating away their time and income.

Grocery retail chains were in the past prevented from operating in townships, either because of apartheid-era legislation or political unrest. When the laws changed and the unrest stopped, the expected rush of retail chains into the townships did not materialise.

Now that apartheid laws and unrest have disappeared, providing them with a big opportunity of expanding into the townships.

In spite of this, the expected rush into townships did not happen immediately after the fall of Apartheid in 1994.

One reason why financial institutions have been reluctant at the start of the post-Apartheid era is that they are overextended in property investments elsewhere.

This was one reason for the slow development of shopping centres in townships, George Skinner, executive director of the SA Council of Shopping Centres, says also that some supermarket chains have also been going through a difficult period over the past few years.

Low-to-middle-income chain Shoprite was more concerned at the time with integrating the Checkers chain and OK Bazaars acquisitions than expansion, said Standard Corporate Merchant Bank securities retail analyst Even Walker.

Shoprite marketing director Brain Weyers admitted that the group was not completely focused on expanding into low-income areas, but said now it was now 'actively' doing so.

Weyers said the stores Shoprite opened in Khayelitsha and Soweto were performing very well, and the support they had in those communities was strong.

National African Federated Chamber of Commerce and Industry CEO Sabelo Macingwane said that whenever a supermarket opened up in a township the local stores were driven out of business.

'That's not true' said George Skinner., when asked about small retailers been put out of business.

Skinner disagreed, saying that shopping centres acted as magnets in attracting more people to that area, and so benefiting the surrounding businesses and keeping money in the township.

Publisher: Business Day
Source: Larry Claasen

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