Retail turf war heats up

2014-09-16 00:00

A FIGHT over grocery turf at shopping malls has become so bitter that “if an egg rolls through the front door of a Game store, Pick n Pay will probably sue.”

The lawyer who told this to The Witness, Chris Charter, is fighting one of three battle fronts against the major supermarket chains for Massmart, as the retail giant seeks to roll out grocery outlets at malls.

KZN consumer experts said shoppers would enjoy promotional discounts and slightly lower food prices if Massmart won the battle for the right to open its Foodco outlets in almost every Game store in the country.

Pick n Pay and Shoprite have gone to court — and to mall bosses — to demand that they enforce old exclusivity agreements with centre owners, which restrict them from signing-up rival supermarkets like Foodco.

The malls have now joined Massmart’s fight.

Last week, a spokesperson for the Competition Commission revealed to The Witness the South African Property Owners Association (Sapoa) — representing landlords — has filed a complaint, “which will be fully investigated”.

Meanwhile, Charter said Massmart would file a “comprehensive” complaint to the Commission this month.

And in a blitz, which has caught supermarkets off-balance, Massmart — now controlled by U.S. giant Walmart — has already rolled out Foodco sections at 55 malls around South Africa, often in open defiance of exclusivity agreements.

One retail source said many malls had “developed amnesia” over the contracts in failing to stop Foodco.

The retailers have fought back with court actions at three malls.

A Game spokesperson confirmed that expensive refrigeration equipment established at Game’s Midlands Mall store in Pietermaritzburg is standing idle, as a result of one Pick n Pay legal action this year.

Meanwhile, Charter alleged that Pick n Pay had launched a “pre-emptive strike” with letters to malls in KZN and elsewhere, demanding that they enforce the exclusivity agreements and ban the Foodco outlets from operating.

He could confirm the letters, because they had been copied to Game stores.

Many KZN mall-goers are already doing their monthly shopping at Game food stores at Gateway, Westwood Mall in Westville, West Street, and ­Pinecrest Centre in Pinetown.

David North, head of strategy for Pick n Pay said: “If you enter freely into an agreement, you should honour it.

“We don’t want to go to court any more than anyone else does.

“Unfortunately, in a couple of cases, we have had to do that to stop our lease agreements from simply being ignored.”

Sapoa CEO Neil Gopal said “most mall owners would no doubt welcome” any ruling to overturn the restrictions.

“We believe enforcement of exclusively clauses is anti-competitive as consumer choices are significantly limited,” he said.

Adding fuel to the fire between the giants is that Massmart has already been ordered to spend R200 million to develop small suppliers, as part of its merger conditions with Walmart.

Charter said it was “unfair” that Foodco was excluded from benefiting from some of the business from these same suppliers at restricted malls, while their rivals were cashing in on their goods.

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