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The Wholesale and Retail of Food
A precise valuation of the entire wholesale and retail market for foodstuffs is complicated by the fact that the informal sector continues to play a significant role but estimates of its value vary wildly. Recent market surveys indicate an estimated figure of between R42bn and R46bn for the informal food retail market in 2016. In contrast, Pick 'n Pay, citing Nielsen, states that the informal sector accounts for between 30% and 40% of South African food sales and estimates the total market for 2018 is worth more than R800bn. A number of submissions to the Competition Commission, which is currently conducting an inquiry into the Grocery Retail Market, state that South Africa's large retailers hold more than 70% of national market share and some estimates reach as high as 90%.
The South African grocery industry is highly dependent on consumer spending and economic growth. While positive at 1.3% year-on-year, GDP growth in 2017 was muted and consumers were pressured as real incomes failed to keep up with relatively high food price inflation. Combined with high unemployment, South Africa's slow economy is not conducive to increases in disposable income and retail sales growth has been muted. However, proportional grocery spending at middle- and upper-income households is increasingly rapidly and retailers are looking to leverage the upmarket, high-margin niche currently occupied by Woolworths.
The report on the wholesale and retail of food examines current conditions, the strategies employed to increase market share and factors that influence the success of the highly competitive sector. Profiles for ten companies are included in this comprehensive report. Apart from the “Big Five”, Shoprite, Pick 'n Pay, SPAR, Massmart and Woolworths, there are profiles for Wellness Warehouse (Pty) Ltd, which has 29 stores, including one online store, and Choppies Enterprises Ltd, which secured approval to acquire 21 retail stores owned by South African firm, Jwayelani Retail during 2016.