The struggles of independent retailers post the Great Recession
The Chinese shopkeeper taking a smoke break on the street in Plettenberg Bay was surreal to say the least. He stood out like a sore thumb: neither a local, nor the well heeled, mink & manure polo set that takes over the small coastal town during the December holiday season. In high season, he might have been taken for just another tourist. But I was visiting Plett off-season, after the holiday crowds returned to work, and that’s when you see the real dynamics of a small coastal town, and what I saw disturbed me.
For years I’ve taken an off-season holiday in Plett, but I had not been to this neck of the woods for several years, in fact ever since the global financial crisis hit. Seeing the long-term effects of a protracted downturn economy on a small town in South Africa was sobering. In big cities like Jozi, The Great Recession (as it is now being called) is talked about in terms of stats and figures. Economists and analysts fill media space with projections, assumptions and speculations on the impact on retail, consumer spend and the working classes. The upper middle classes use the information as dinner party fodder while the new elite simply buys handbags for R100K – because the colour matches their new SUV.
Back in Plett – the coastal town, not the glamorous holiday destination – the stats and analysis from the economists manifest in the cruelest of ways. “To Let” signs are everywhere and the empty retail spaces serve as a harsh reminder of how transient the glamour of the holiday season really is. There are a few businesses that manage to bridge the gap between sustainable, all year local trade and the short, intense holiday season boom, and speaking to those local business owners confirms the depressing visual evidence. The Great Recession has shrunk Plett’s economy by approximately one-fifth. For a small town, losing 20% of your consumer business is devastating. Add to that, the fact that 60% of South Africa’s economy is driven by consumer spend, and you understand the devastating ripple effect of those “To Let” signs.
Just off the high street in Plett are smaller shopping centres, where the local communities do their shopping, and the tenants who populate these centres, is telling. There is a now ubiquitous mix of second hand stores and cheap clothing stores, owned and manned by Chinese nationals. I’m used to the large discount centres, like China City on the outskirts of Johannesburg, but the proliferation of these smaller retailers is new – and unexpected – especially in a far-flung coastal town like Plett.
Twenty minutes down the garden route in Knysna, the same scenario plays out. Empty shop fronts and “To Let” signs dominate the once vibrant main street. Knysna has always had a bohemian reputation: a creative hippie hub on the Garden Route. You would always be guaranteed to find interesting and unusual shops in Knysna, from handcrafted goods to quaint coffee shops and restaurants. Not so in 2014. The bohemian character has been replaced by shops selling airtime, shops stocking cheap clothing or home ware, and (a first for me) R5 shops. The only evidence of new business growth is a new shopping mall, but all the tenants in this mall are our local mass retailers, found everywhere in South Africa. If I were a first time visitor to the area, I’d be questioning what all the fuss was about: besides the spectacular geography it is soulless, homogenous and bland.
We are not alone in this shift to ubiquitous blandness. In the past five years, independent retailers the world over have had to close their doors – you can only fight the good fight for so long. Cash strapped consumers have migrated to the mass retailers, while the independents have (at best) had to reinvent their businesses for weekend artisanal markets.
An economist who specialises in African markets mentioned to me recently, that the two things you will now find wherever you travel in Africa are Coca-Cola signs, and cheap Chinese clothing shops. While there is growing criticism of China becoming the new economic colonialists of Africa, I view it is a slightly different light, when it comes to retail. The majority of the products that our mass retailers stock, is – and has always been – made in China. The fact that they are labeled and sold by local retailers as their own brands, has simply disguised the source. It is only because these Chinese entrepreneurs are now opening their own independent retail outlets, that it has become more obvious. The cheap clothing they stock might come from a lower rung on the Chinese clothing manufacturing ladder, but the fast fashion items we buy from South African retailers comes from the very same supply chain.
My point is not that China dominates this value chain – it always has. I’m lamenting the loss of creativity and individuality as the recession forces us to embrace the lowest common denominator. Independent retail is collateral damage in a globalised world. Cheap is not necessarily cheerful.
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