SMME focus: Why Shoprite is betting big on small business

As the backbone of South Africa’s economy, small, medium and micro enterprises (SMMEs) account for more than 90% of all formal businesses. A recent State of the SMME report released by Shoprite in partnership with World Wide Worx, sheds light on the current state of these tiny titans, highlighting their struggles, triumphs and vast potential.

Retailers’ commitment

Shoprite Next Capital's investment of R20-million in 64 SMMEs underscores the retailer’s commitment to empowering SMMEs and unlocking their growth potential. During the financial year to the end of June 2024, Shoprite procured R2.8-billion of goods from black-owned SMMEs. On the fresh produce side alone, R1.2-billion was procured from South African SMMEs. 

The other giant retailer in the market, Pick 'n Pay is not slouching when it comes to SMME support either, with 178 entrepreneurs enrolled in its enterprise and supplier development programme.  The retailer’s initiatives include mentorship, business development and financing options like Fast Pay, which provides early payment at competitive rates to small suppliers. Pick n Pay also hosts the annual #BoostYourBiz Summit, recognising top-performing SMMEs for their sales growth, job creation and innovation.

Government’s potential promise

Building on this momentum, the Department of Small Business Development has allocated R2.1-billion to support 120,000 small businesses over the medium term, prioritising women-, youth- and disability-owned enterprises in townships and rural areas. 

Additionally, R313.7-million will establish SMME hubs to drive expansion, alongside a R1-trillion infrastructure investment over three years, targeting sectors that offer significant procurement opportunities.

In his Budget speech on 12 March, Finance Minister Enoch Godongwana also highlighted Operation Vulindlela’s achievements since its inception in 2020, including a 51% reduction in the cost of a 1.5GB data bundle, enhancing digital access for small businesses and individuals.

Shoprite’s SMME strategy

Despite these commitments, the Shoprite and World Wide Worx report reveals significant hurdles.  

“Shoprite is making the data from this report available to all businesses, all interested parties to help them understand what the factors are affecting their competitiveness and what they should strive to achieve to reach a high level of competitiveness,” said Arthur Goldstuck, managing director of World Wide Worx.

He added that this initial research is just the starting point, and the ultimate goal is to research and secure funding or revenue streams that will enable SMMEs to conduct their own proprietary market research.

Gender and age gaps

One area where this research is particularly pertinent is in addressing the disparities that persist in the SMME sector. Gender and age gaps are a striking example.

Gender equality remains a distant goal in South Africa’s SMME sector. Male entrepreneurs dominate ownership, holding 51.2% of all small businesses, while female ownership lags at 37.7%, and joint male-female ownership accounts for only 11.1%.

The disparity becomes sharper as business size grows. Women lead in ownership of smaller enterprises, controlling 51.3% of businesses with one to five employees. However, their representation drops drastically in larger firms; women own just 12.6% of enterprises employing 51 to 200 people. This trend highlights significant barriers to scaling up women-led businesses.

Age dynamics further complicate the sector’s challenges. Entrepreneurs under 34 face hurdles such as limited access to capital, mentorship and market opportunities, leaving them struggling to compete. Meanwhile, older business owners aged 45 to 54 dominate, representing 36.7% of all SMME owners.

Read more: Small businesses a viable path to youth employment but equity obstacles need to be addressed

The enterprise and government relations executive at the Shoprite group, Maude Modise, emphasised the need for targeted interventions such as bespoke mentorship programmes to help women entrepreneurs scale their businesses and gain a stronger foothold in mid-sized enterprises where their presence diminishes as businesses grow.

Divided opportunities

Imagine two South Africas, one flourishing, the other struggling to survive. Gauteng, home to 34.6% of the country’s SMMEs, and the Western Cape, with 31.3%, offer entrepreneurs a wealth of opportunities: advanced infrastructure, skilled talent and a steady customer base.

Contrast this with the Northern Cape, where only 1.1% of SMMEs operate, or North West at 1.8%. Here, businesses face significant challenges, including poor internet connectivity, limited funding and shrinking markets. Geography becomes destiny in this divided landscape, where success often depends on being in the “right” province.

The geographic distribution of SMMEs. (Image: Shoprite)

The weight of red tape

Adding to these challenges is the growing burden of red tape (excessive regulations). Goldstuck pointed out the need to reduce regulatory hurdles for small businesses and that national, regional and local governments must prioritise reducing this burden, especially for scaling SMMEs.

For micro enterprises the situation is particularly dire. Many lack the capacity to hire dedicated staff to navigate complex regulations and compliance requirements. This disproportionate burden stifles their growth and viability. Goldstuck emphasised that limiting regulation and oversight for SMMEs is essential to fostering their success.

Tax incentives could also provide relief. “Greater tax breaks would enable small businesses to expand and employ more people without being overwhelmed by compliance demands – a necessary step towards unlocking the potential of South Africa’s SMME sector,” he said.

Economic challenges

As these regulatory challenges persist, SMMEs are also bracing for a new wave of economic headwinds. Recent fuel price drops bring temporary relief to logistics-reliant growing enterprises.

However, the return of load shedding, electricity price hikes and a VAT increase to 15.5% on 1 May will pose significant challenges, straining resources and burdening these small enterprises.

Read more: Big fuel price cuts to bring hope

“Businesses may try and absorb [these costs] initially but will eventually need to either up their prices or find innovative ways to reduce [costs]. It’s clear that exploring energy alternatives is not just a matter of ensuring stable supply – renewables in particular look more and more appealing from a cost-saving perspective as grid electricity continues to get more expensive,” Miguel da Silva, group executive of business banking at TymeBan, said.

What this means for you

Against this backdrop, initiatives that support SMMEs are becoming increasingly important. Shoprite, for example, plans to boost SMMEs by providing them with access to resources such as marketing opportunities, working capital assistance and packaging support. For consumers, this translates into:

• More variety: SMMEs can introduce innovative products to Shoprite’s shelves, offering a wider selection;


• Improved quality: Access to expertise helps small businesses refine their products, ensuring better quality for shoppers; and


• Local impact: Supporting SMMEs through Shoprite contributes to job creation and economic growth in local communities.

Shoprite showcases products from local small, medium and micro enterprises. (Photo: Shoprite)

“A lot of customers want to support local, buy local, support entrepreneurs, and they don’t really have the insights when they see a product on the shelf,” Maude said.

She explained that Shoprite partners with the SMMEs and provides them with PR and marketing support. This collaboration will help increase sales for the SMMEs by educating customers about their products and stories, leading to a positive impact on sales. 

How to become a Shoprite SMME supplier

If your enterprise has an annual turnover of R5-million or less and a unique product to offer, you can apply through Shoprite Next Capital. This involves completing an online application with key documents such as your business profile, proof of turnover, B-BBEE certificate and health and safety certificate.

Once validated, you’ll meet a buyer to discuss your business, followed by quality checks for your product samples. Successful applicants receive support in packaging, branding, financing and training to seamlessly integrate their products into Shoprite’s ecosystem. 

Goldstuck concluded: “SMMEs are so critical to the economy, more large enterprises need to be supporting them in this way in order to lift the economy as a whole, which will benefit the large enterprises themselves in the long run.” DM