As the big players in retail feel the effects of inflation and unsecured lending and go to court in an effort to retain their mall exclusivity clauses in their contracts and taking the matter to the Competition Commission, OBC Chicken, independent chicken and complementary products franchise retailer with over 50 stores country wide, continues to show good trading results whilst fighting to secure sites as these same anchor tenants flex their muscles to ‘block’ landlords giving smaller tenants leases.
According to MD Tony da Fonseca, this has become a problem that needs to be brought out in the open. “When positive negotiations with landlords are suddenly reneged on for no reason whatsoever, one becomes concerned. As the only franchise retail group that has a history of over 25 years of trading successfully in predominantly black areas, it is of concern that now, when many of the big players in the retail supermarket arena have discovered the potential of trading in high density black areas, we are experiencing what is commonly known as ‘blocking’ of sites by the anchor tenants who obviously have a greater say in the tenant mix of shopping centres.”
“In some instances it is understandable with some malls not having the trading densities to accommodate multiple anchors. But to exclude a relatively small player of the likes of OBC is really stifling local entrepreneurship and is blatantly anti-competitive. We have found this happens in all the malls where the big players are anchor tenants” confirms Da Fonseca.
OBC Chicken started 25 years ago as a small grocery store in Carltonville, opened its first franchise in 1999 and to date has over 50 combined company and franchised stores that serve a market of millions of consumers in townships, commuter areas and city centres. Affectionately referred to as “Ikhaya Lenkukhu”, the Home of Chicken, OBC’s bright stores not only supply fresh and frozen chicken products but have expanded their range to include meat, fish, processed meat, dairy products and selected groceries.
“OBC was started as a Portuguese family enterprise based on that community’s tradition of trading in predominantly black areas” says Da Fonseca. “As a group of like-minded traders with a passion for making a difference in people’s lives, OBC Chicken can be credited for changing the face of retailing in township and downtown areas. Where others have tried to penetrate this market with inferior products and run-down stores, the OBC Chicken stores, with their clean, bright stores, latest in lighting, refrigeration and packaging and impeccable standards of hygiene, have raised the area’s standards and the shopper’s quality of life.”
With OBC Chicken, now owned by Fourie’s Poultry, focusing on expansion and diversification, it is important that there is fair play with both landlords and developers when it comes to the mix of tenants in a centre. With OBC Chicken firmly entrenched as a community brand and with its aggressive expansion plans, it’s clear major retailers, who now all want to be part of the lucrative emerging market, are seeing OBC as a threat, despite OBC Chicken competing in a smaller percentage of the total food offering.
Says MD Tony Da Fonseca, “What is overlooked by many property owners/developers is the fact that OBC Chicken adds value to a centre in being a ‘sub/secondary’ anchor in what would normally be a quiet section of a mall or centre. The ramifications of this is that smaller and independent traders, ranging from fashion, prepared foods to furniture end up in a situation where they alone cannot draw the feet OBC can to that section, adversely affecting their ability to trade profitably. This has larger implications to traders than simply ‘blocking’ OBC!”
The economic downturn of the past five years has not affected the OBC group to the same degree as it has affected other retailers, according to MD Tony da Fonseca. “While most food retailers have been climbing the LSM ladder eager to outdo each other to cater to the upwardly mobile and are now feeling the squeeze as consumers are having to cut out luxuries to survive, OBC Chicken has stuck to its core business of serving the mass market by being consistent, competitive and convenient, offering quality even in the most basic food offerings. This has resulted in its stores continuing to be trade profitably – with over 80% of the stores in the group growing their turnovers in excess of 25% in the last 5 months with some stores doubling their turnovers in the past twelve months.”
With the bulk of OBC’s businesses in outlying areas, they hope to expand their franchise footprint even further into the far corners of the country. Interest in the brand is high. “This is partly due to the effects of brand migration where migrant families going home to their homelands stock up on OBC Chicken supplies and fuel a demand in those areas for an OBC store to be set up. OBC’s expansion is based very much on consumer demand and, as a member of FASA, OBC Chicken is benefiting from government’s Jobs Fund allocation to franchise companies through the Business Partners/SA Franchise Warehouse initiative.”