e-spaces

Large food retail chains, which rely on massive bargaining power to get the best deal possible from suppliers, may do consumers more harm than good. This is implicit in comments in a report on the website of the National Agricultural Marketing Council.

The report covers the impact of market power and dominance of supermarkets on agricultural producers in South Africa.

It says the major food companies have effective working relationships with large chain stores: “Negotiations are tough but the relationships have matured and are much more cordial.”

But the small suppliers, who spoke anonymously for fear of retribution, said they found it difficult to survive financially because of the unfavourable terms at which they needed to trade.

“There seems to be substantial evidence that practices by retailers act as an entry barrier for many smaller suppliers,” the report said.

“This situation can potentially lead to greater concentration in the food manufacturing and retail sector.”

The less the competition in the sector the less pressure there is for suppliers and retailers to keep prices low. Moreover evidence of price fixing in the bread industry is a sign that despite their bargaining clout, supermarkets were unable to prevent the practice, which went on for years.

The report identifies many problems along the supply chain. But it also allocates blame to customers for wastage and loss. It says customers collect cold meat or other perishables in their baskets, then change their minds and leave them, for example in the clothing department. Or they leave their food in the car boot for a few hours and then return items to the store because the food has “gone off”.

An issue the report didn’t raise is the cost of theft. When people consume food before they reach the tills, other shoppers indirectly pick up the bill.

Mall malpractice

A flawed process over a new shopping mall seems to be at the heart of the conflict that has pitted black business and the Durban city council against street traders, advocacy groups and public sentiment.

Such a media storm has ensued that city officials and the developers are keeping a very low profile.

The controversy: a 30 000m2 shopping mall and taxi rank. The shopping centre with banks, fast food outlets, a supermarket and clothing shops will replace the historic Early Morning Market, where fresh produce has been sold for 100 years. In some cases third- and fourth-generation vendors sell from the same site as their forefathers did: a special piece of history that could be demolished.

But as wonderful a slice of the past as it is, it is not the most pressing concern.

For the 460 000 daily commuters in the area the worry is access to the relatively cheap food that the 8 000 vendors sell. Detractors of the new mall say the area will be reconfigured to direct foot traffic away from vendors. Supporters say vendors at the Early Morning Market will be given alternative sites at which to operate.

The battles that erupted over this development might have been avoided if a proper social and economic study was done. Firstly, on whether a new mall was needed in the city centre, which already has plenty of formal shops; and secondly, whether it was likely that it would threaten the livelihoods of the thousands of traders on which many people depend.

What is troubling is why the city did not publish a call for expressions of interest in redeveloping the site. Instead a group of well-connected business people, along with Isolenu, a property development company, secured the rights to the redevelopment without any transparent process.

Or so it seems, as no clarity from either the city or the developers could be gleaned yesterday, despite numerous attempts.

Perhaps the shoddy process has to do with the pressing deadline of the World Cup. The development forms part of the city’s plans to upgrade transport networks. But that is no excuse for marginalising an important section of Durban’s economy.

Restaurants go hungry

A selling point to tourists from overseas is the excellence of South African restaurants, especially compared with affordable ones in the UK. The exchange rate also makes local restaurants very affordable.

This is one of the selling points used by our tourism marketers, particularly for Cape Town. But some of the best restaurants in the city have closed recently and the tourism industry fears more will face this fate as the recession continues.

The Cape branch of the Federated Hospitality Association of SA (Fedhasa) says the pruning of executives’ entertainment expense accounts is largely responsible.

Fedhasa chairman Phillip Couvaras and vice-chairman Rey Franco say that business expense accounts are being scrutinised and, for most companies, have been slashed or are now vetted. “More importantly, companies simply cannot afford to be seen allowing their executives to run up large restaurant bills while back at headquarters major cost cutting or staff retrenchment exercises are under way. Those venues whose core business is this (type of) customer, now need to diversify rapidly or share the same fate of some (recently closed) outlets,” they say in a statement.

Apart from the pruning of expense accounts, the duo point out that it is normal for some Cape Town restaurants to close at the end of the tourism season or open ahead of the next one. “The current decline in international tourists, coupled with a drop in local consumer spending, are the key factors that have facilitated the latest round of restaurant closures,” they say.

In addition to this “patrons are now more careful when selecting dining options. Decisions tend to be based on value for money and friendly, efficient, service.”

However, business visitors are economising on quantity rather than quality when ordering wine.