SA Retailers Small potatoes
South African retail is having its day in court, and so far the proceedings have been brutal, with various players giving the big guys stick from all angles at the Grocery Retail Sector Market Enquiry, playing to packed houses over at the Competition Commission. This last week, it was the turn of the smaller suppliers, which argued, in a nutshell, that they don’t get a fair shake when it comes to supplying the big retailers, finding it difficult to meet the burden of costs which may include labelling, standards compliance, refrigeration and transport. There have been calls for retailers to be compelled to stock a minimum of products from small suppliers. This is one of those instances where the story is the story – the press has been full of these stories this week, not all of them entirely accurate, with very little comment from any of the corporate retailers themselves. All of whom, it should be noted, have their own supplier development programmes from Massmart (see below) to SPAR, Boxer and Shoprite, which each have significant programmes for the support of small farmers.
Comment: What is lost in this investigation is the fact that the retailers are merely the front end of a long value chain where costs are added at every point, from the farm to the forklift. And that small suppliers are subject to the same market forces which reward scale as a means of delivering value to the end consumer. Tricky stuff.