Mr Price debuts new container store for South African townships

South African fashion retailer Mr Price has launched a new format container store in a bid to bring retail closer to lower end consumers. Its new smaller format store has opened in Illovo, in KwaZulu-Natal. But can it revolutionise retailing in the townships?

Mr Price is partly positioning it as a response to the COVID-19 pandemic – moving retail closer to consumers, using local staff and being more agile. The new stores offer a reasonable range of cheap fashion-led clothing in a fairly functional store environment.

The move follows similar efforts from supermarket leaders Shoprite and Pick n Pay. Shoprite launched its no frills USave eKasi container store format in townships in Spruitview, Gauteng in 2017. Its eKasi stores measure between 100m² and 200m². After a successful trial, Shoprite accelerated the programme in 2019. By the end of 2019 it operated 27 eKasi stores.

In 2016, Pick n Pay launched a new programme to convert spaza shops in townships into Pick n Pay franchise stores. As part of the franchise agreement, the retailer upgraded the spaza shops, which are then managed under the Pick n Pay brand.

The problem in both cases is that local entrepreneurs not connected into Shoprite or Pick n Pay’s supply chain cannot compete on price and find themselves facing what they see as unfair competition. This issue was raised in a lengthy report by South Africa’s Competition Commission, which looked at the power of the leading supermarket chains.

The problem is, innovative although these new store formats are, they rarely feel much more than a token effort at black empowerment and community building. To some extent, retailers are damned if they do reach into power communities and bring lower cost of goods to marginalised communities, because their entry inevitably upsets local ecosystems.

Moreover, there is no sign that major South African retailers are willing to take the container store model outside South Africa, even into easier markets bordering South Africa, such as Botswana, Malawi, Lesotho, Swaziland or Mozambique.

Trendtype believes that the franchise model and the “modernised” container store model both offer routes for modernisation in a number of markets where building larger modern stores may be too risky or unviable. It will be interesting to see whether the dynamics for Mr Price are different than for the supermarket chains, and whether the retailer has the appetite to develop the format to maturity.