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SA’s big supermarkets told to drop exclusivity clauses in mall leases

At least 70% of shopping malls are subject to exclusive lease agreements, inquiry finds.

South Africa’s biggest supermarket chains could be forced to drop exclusivity clauses in shopping mall leases if they fail to do so voluntarily, the country’s competition watchdog said in findings from a sector inquiry published on Monday.

The grocery retail market inquiry was initiated in November 2015 to deepen understanding of a sector dominated by Shoprite Holdings and its upmarket chain Checkers, Pick n Pay Stores, Spar Group and Woolworths Holdings.

The inquiry found “features in the South African grocery retail sector that may prevent, distort or restrict competition”, inquiry chairman Halton Cheadle said as the final 600-page report was unveiled on Monday.

Among those features are exclusive leases and tenant mix clauses negotiated by the major chains in shopping malls across the country to deny opportunities for specialist, emerging chains and small, medium and micro-enterprises (SMME) in areas where the majority of consumers do their weekly and monthly shopping.

“Of even greater concern, these agreements also systematically deny the opportunity for specialist stores and independent entrepreneurs to locate in the mall if they compete with any of the national chains’ product lines,” Cheadle said, quoting the report.

One such retailer was Walmart-owned Massmart, which in 2014 lodged a complaint about exclusive lease arrangements that it said were hampering its expansion into the fresh groceries sector.

The inquiry found that more than 70% of shopping malls, which account for about half of all grocery sales nationally, are subject to exclusive lease agreements.

It recommended that national grocery retailers immediately cease enforcing exclusivity clauses against specialist and SMME stores in shopping malls and all grocery retailers in non-urban areas where there are fewer alternative malls.

Cheadle said the measures will be achieved through voluntary compliance within six months from November 25 or the regulator would instigate “legislation in the form of regulations or a code of practice”.

“The inquiry strongly believes that a less concentrated grocery retail sector, with a large ecosystem of small independent traders alongside national retail chains, is in the best interest of the economy and consumers,” Cheadle said.

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I do trust that Mathebule and sons are able to step in and take over the leases when vacated !!!

The only monopolies allowed in South Africa are SOE’s…

The irony is staggering…

SA has been characterized by monopolies like no other country on earth, partly due to apartheid and decades of cozy deals.

This is good.

The next step is for the competition to take a ruling on how the top five listed companies monopolize the retail and office space markets and how the local authorities are complicit in allowing super-regional shopping centers to get more and more rights, instead of forcing them to break up and compete.

Perhaps part of Spar’s success is that they are not situated in the Malls and don’t suffer from forced higher rental contracts! It all adds up!

This government wants to reduce everybody and every commercial entity to the lowest common denominator – except the ruling cabal and friends of course . they want inefficient little spazas instead of 1st world powerhouses.
Whatever this government does , ruins the country:
A AA BBEEE dictating to business who and what colour their staff has to be
B Special birth certificates for child tourists
C Dictating to Air b n B how where and what they can do
Zimbabwe here we come, but we will be rich with the land and Z$ 500,000 notes LOL

If SA is to have competition and wealth-growth the monopsony of Big Chains and oligopoly of Big Food also needs to be challenged.

We also need to tackle food security and supply. It is absolutely criminal that in an arid country like SA the government is distracting the voters with debates about EWC while allowing farm murders to continue and cocking up water- and electricity supplies.

Imagine if the money spent propping up SOEs being bankrupted by deployed-cadre incompetence, indifference and theft had been invested in dams, electricity supply and other infrastructure

The natural outcome is for the big retailers to own key malls. Perhaps smaller malls than the obscenities we currently have. Those are dying anyway elsewhere in the world.

u might be right JB about major retailers owning shopping malls.
But consider Icahn ( US mega investor)has shorted shopping centres to the tune of billions – my money is on Icahn
p.s a family member living in Europe went to a black friday sale and said it was a non event
me thinks e shopping is gonna gobble up brick and mortar shopping
even ladies do’nt need retail therapy anymore

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