By Thapelo Molefe
The Competition Commission says township and rural malls could face investigations if they are found to be excluding smaller businesses from formal retail space.
In its Rural and Township Economy Project 2026 report, officially launched on Thursday, the Commission found that many township entrepreneurs want to trade in malls but are blocked by high rentals, exclusivity clauses, landlords favouring established brands, fear of competition, and a lack of information about how to secure space.
The Commission said the limited presence of local businesses in shopping centres reflected “latent demand” from businesses trying to break into the formal economy. Fifty-four percent of both independent and informal township businesses surveyed said they had not tried to move into a formal retail setting, but were interested in doing so.
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The gap in access to formal retail is reflected in how businesses reach customers. About half of surveyed businesses rely on their own physical stores, with 51% of township businesses and 48% of rural-town businesses using their own premises.
By comparison, only 6% of township businesses and 10% of rural-town businesses sell through major retailers, leaving them dependent on local walk-in customers and limiting their ability to reach larger markets and grow. “Route-to-market constraints materially limit business growth,” the report states.
The Commission identifies shopping centres as an important route to growth, giving businesses access to high-footfall locations, more customers and more stable demand.
But it warns that when landlords and centre managers control who gets space, tenancy decisions determine which businesses gain access to customers and which remain outside the formal economy.
It points to three ways restrictions can arise: exclusivity clauses that block competing tenants, tenant-selection practices that favour national brands, and high fixed costs, rentals, deposits and centre levies, that smaller firms struggle to afford.
Even businesses that do secure a lease face pressure from these ongoing costs, particularly when competing against established national brands.
The report says formal retail nodes can operate as “gatekeepers rather than neutral platforms for entry and expansion”, creating a situation where businesses may have demand for their products but cannot access the spaces needed to reach more customers.
The Commission’s 2019 Grocery Retail Market Inquiry found that exclusive lease agreements in shopping centres could restrict competition by preventing landlords from leasing to competing or specialist retailers.
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That inquiry included a retail property-focused code of conduct requiring greater transparency in leasing decisions and commitments that future leases should not include exclusivity clauses or letting restrictions, commitments the new report calls for follow-up work to assess in township and rural retail markets.
The Commission says the issue extends beyond individual businesses failing to secure premises. Restricted access to formal retail channels can have wider consequences for competition by limiting the number and variety of businesses able to operate in high-footfall locations.
When smaller firms remain outside major retail spaces, they are more likely to depend on local customers and stand-alone premises, making it harder to expand. A lack of information about how to access formal retail compounds the problem. Some businesses simply don’t know what requirements malls have for prospective tenants or how leasing decisions are made.
The Commission says follow-on work could include examining whether potentially exclusionary conduct in retail property markets is restricting access for small and historically disadvantaged businesses. This would be done alongside engagement with the DTIC, the Department of Small Business Development, retail-property stakeholders, major retailers, e-commerce platforms and relevant municipalities on practical ways to widen access to formal retail and digital channels for smaller firms.
