Do large retailers displace small informal retailers? : the case of Pick n Pay in Kwa-Mashu.

Abstract

Purpose – This thesis presents a study of large retailers and spaza shops in the township of KwaMashu, South Africa. The aim is to explore the effects of the new large retailer of Pick n Pay on spaza shops. The core research questions are: Are there any links between the spaza shops and Pick n Pay?, Does Pick n Pay stimulate or displace spaza retailing?, Have spaza shop owners lost markets for their goods as a result of the entry of Pick n Pay?, How do spaza shop owners respond to the entry of Pick n Pay? Methodology and findings – The research documents the experiences of current and former spaza shop owners on which data was collected. The core findings confirm that spaza shops in close proximity to Pick n Pay are more likely to be prone to negative impacts – specifically on consumer volume, stock size, and profits – compared to those in outlying areas. In a competitive market spaza shops are vulnerable on prices. Very few of the spaza shops have adopted business strategies in response to the larger competitor. The findings confirm that Pick n Pay’s presence has provided some benefits to local shops in the form of easy access to supplies and reduced transport costs.