Markets of the People: the struggle for fair competition in South Africa’s informal retail sector

Abstract

This study examines the nature of competition within South Africa’s informal retail sector, arguing that it is heavily shaped by business, institutional, spatial, structural and systemic factors rather than being determined by market forces alone. Drawing on qualitative evidence from interviews with informal traders and sector stakeholders, the study distinguishes between horizontal competition among informal traders, and vertical competition between informal and formal retail actors. The findings of the study show that at the horizontal level, inconsistent enforcement of permits and by-laws, administrative exclusion, corruption, and informal traders’ unequal access to resources and supply networks create uneven competitive conditions and intensify tensions among traders. Practices such as permit renting emerge as traders’ adaptive responses, but they also contribute to market distortions and unequal access to trading space. At the vertical level, urban development patterns and the expansion of formal retail reshape market access, often displacing or marginalising informal traders. The findings highlight how regulatory frameworks and enforcement practices, even when not explicitly designed to regulate competition, nonetheless structure competitive outcomes. They also underscore the importance of managing coexistence between Informal and formal retail sectors to support inclusive growth and development. The study emphasises the need for policy approaches that recognise fair competition within the informal retail sector as shaped by forces beyond market exchange alone, and central to an enabling ecosystem that prevents a race to the bottom and supports more equitable and sustainable livelihood and enterprise outcomes within urban retail systems.