A huge R1.5bn investment by Shoprite and a development partner is set to make Gqeberha the distribution nerve centre of the retailer’s provincial operations.
The investment will unlock new markets for the retailer and drive spin-offs for the local economy, including the creation of 1,300 new jobs in Nelson Mandela Bay and access to a bigger value chain for small-scale suppliers.
Shoprite executives and their development partners, Equites Property Fund, were joined by mayor Retief Odendaal on Wednesday in Wells Estate for a sod-turning ceremony for the new 90,000m² logistics and distribution centre.
With the supply chain a key driver in lowering prices, Shoprite’s chief supply chain officer Andrew Havinga said the centre would connect the group’s distribution network in the province, which would enable more efficiency.
“By putting up a big centralised distribution centre it ensures we get far better service,” Havinga said.
“Today our stores rely on local suppliers to get products to their stores on a daily basis.
“We have a small distribution centre with a small number of items, so predominantly the large amount of products go directly to our stores so when suppliers have challenges it means that service levels to our stores are not the best.”
The retailer will supply more than 250 stores in the province from the new centre.
Havinga said another benefit was of reaching new markets which may have been in isolated areas in the retailer’s distribution chain.
“We are very optimistic about the Eastern Cape.
“This is an excellent opportunity to continue looking at opening up new stores because [when] you open in isolated areas it’s [usually] hard to get stock to them.
“But if you have a centralised distribution network, it’s easier to get the stock to them efficiently,” he said.
The construction of the centre will create 800 jobs when it starts in April.
“Additional economic opportunity is for the suppliers we will be able to support,” Havinga said.
“At our Freshmark centre [located on the same property], we have about 48 suppliers, of which 22 are SMMEs that deliver fresh produce.”
The new logistics and distribution centre is an expansion of Freshmark — the retailer’s fruit and vegetable division — which has been operating in the area for more than 10 years.
It will also include dry groceries storage, with the Deal Party distribution warehouse closing down.
The total size of the expansion is about 19ha, including warehousing and offices.
The project is a joint venture partnership between JSE-listed Equites Property Fund and Shoprite.
Odendaal said though the city was getting its act together to assist business, it also had a lot to offer investors when it came to infrastructure.
“We do not have nearly as many problems as some of the bigger metros in the country when it comes to infrastructure,” he said.
“We have a manageable city and therefore our infrastructure problems can be solved within a couple of years.”
Odendaal also said the council had committed to future investment in fixing collapsing infrastructure.
“Because of the prolonged drought, we managed in the last three years to create the capacity to bring 100ML of water into the city on a daily basis.
“Once the drought is over, we will have water sustainability for years to come,” he said.
Ward 60 councillor Thembinkosi Mafana said the development would bring more opportunities to Motherwell and Wells Estate residents.
“It is guaranteed that these jobs will come from these communities and across the metro.
“It’s the biggest investment we have had outside the Coega industrial development zone, which is exciting,” he said.
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