What does being Somali have to do with running a supermarket?

I’ve been reflecting on the attacks in recent months on Somali-owned shops around Cape Town, including the violent attacks on Somali-run shops in Masiphumelele township last year. I grew up near Masiphumelele and it’s a place I’ve always regarded as relatively laid-back, so I was shocked last year in August when I heard that a mob of around 200 people attacked Somali-owned businesses in Masiphumelele, chanting anti-Somali slogans. In spite of robust interventions by the police, 27 shops were destroyed and the Somali residents and shopkeepers fled the township fearing for their lives.

While there is undoubtedly an ethnic dimension to these attacks, when you look beyond this you see that issues of pricing, consumer choice, and the growth of supermarkets all have a part to play.

The retail environment in South African townships has, until recently, been dominated by so-called ‘spaza’ shops or residential retailers running small counter-service operations from their houses. In recent years, however, larger self-service supermarkets have begun opening up. Retail chains such as Shoprite own some of these, but Somali immigrants, operating on their own or as relatively small group concerns, have also opened many new supermarkets.

And the arrival of supermarkets seems to have been welcomed by many township dwellers. The Argus newspaper quotes a Khayelitsha woman as saying, “In general, customers prefer supermarkets than over-the-counter shops”.

Some customers like the increased choice offered by supermarkets, but it is clear that these supermarkets are also competing on price. While hardly systematic, a price-check by the Argus newspaper noted that basic grocery items at the Somali-run 1st Choice Supermarket in Khayelitsha were cheaper than those at a nearby South African-run spaza shop. For example, a 2,5kg of bag of sugar cost R14.50 at the Somali shop compared to the R15 in the spaza shop.

We know from previous studies on African retailers that shopkeepers operate with vastly different margins of profit, some as little as 1-3% on particular items. (see e.g. Barry Isaac, ‘Price, Competition, and Profits among Hawkers and Shopkeepers in Pendembu, Sierra Leone’, Economic Development and Cultural Change, Vol. 29 (2), 1981) Perhaps the Somali store-owners are merely operating with lower profit margins than some of their South African counterparts? A quote from a Masiphumelele businessman suggests they may be: “They [the Somalis] said us Xhosa people, when we buy things for R5, we put R2 up. They will only want 50c.”

Or perhaps they are buying their goods at lower wholesale prices? Newspapers in Cape Town have made much of the fact that Somali shopkeepers appear to operate collaboratively to buy in bulk and thereby secure discounts from wholesalers and factories. This is in contrast, they argue, to most South African shopkeepers who buy “in dribs and drabs” for their smaller spaza shops. They have also argued that Somalis have better access to capital than South African shopkeepers.

A great deal has been written in recent years on ‘ethnic entrepreneurship’, and, although its precise definition is debated, Waldinger, Aldrich, and Ward give a pretty solid description of it as

“A set of connections and regular patterns of interaction among people sharing common national background or migration experiences” (Ethnic Entrepreneurs, 1990)

A lot of the literature on ethnic entrepreneurship looks at how ethnicity can impact on the success or failure of businesses. There is considerable evidence to suggest that it is fairly common for shopkeepers from the same ethnic group to club together to, for example, negotiate with wholesalers, and that this may help some businesses to be successful. But this is not so much about particular ethnicities as about social networks, and Zimmer and Aldrich have argued that all shopkeepers, whatever their ethnic backgrounds, share a tendency to draw on social networks of kinship, customers, and suppliers. (Zimmer and Aldrich, ‘Resource Mobilization Through Ethnic Networks’, Sociological Perspectives, Vol. 30 (4), 1987). So, ethnicity is one way into these networks, but there are others.

And there is some indication that South African shopkeepers in Masiphumelele have been collaborating through networks of their own. Local South African traders have tended towards retail price equalization, selling items for roughly the same price according to an unspoken “gentlemen’s agreement”. They were upset when the Somali shopkeepers arrived and started operating outside this arrangement. So in the final analysis, the discord between South African and Somali shopkeepers in Masiphumelele is possibly more a clash of retail strategies and networks than purely a clash of ethnicities. Although I’m not sure that’s any consolation to the shopkeepers of Masiphumelele.

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