Township Tuckshop Wars: How foreign traders dominate SA’s R900bn spaza market

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Cape Town أخبار

Explore how foreign traders have established dominance in South Africa's R900bn spaza market, leveraging social networks and innovative business practices to outperform local entrepreneurs

President Zandile Dabula and members of Operation Dudula, the MK Party, and other formations led a new programme aimed at returning local spaza shops back in the hands of South Africans with the opening of some of the spaza shops that had been closed following the death of six children after eating poisonous food items last month.

“These provide them with access to labour and capital and thus enable collective purchasing and market dominance,” the organisation said after surveying more than 6 000 microenterprises in nine localities. SME identified key factors on the side of foreigners in owning and managing the spaza businesses successfully, and they found that they used supply chain networking and price discounting to procure goods more cost effectively.

Capital investment was another factor. The reliance on the advantage of financial backing from ownership models combined with the benefits of ethnic business networking enable foreign spaza shops to purchase within buying collectives and achieve greater economies of scale. “Each business thus benefits from a procurement and distribution chain that supports multiple stores, and as a result of their scale of operation, each buying collective is able to secure premium terms from suppliers and can reduce transport costs and ensure that shops within the group receive an uninterrupted supply of merchandise.”

 

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