Introduction

There are many posters pasted to the stairwells and the passage walls in the cramped Joburg Mall—a shopping arcade that stretches from Bree to Jeppe streets and that is the epicentre of many street blocks of prodigious retail activity in the north-eastern corner of the Johannesburg central business district (CBD). Some notices are advertorial. There are signs that beckon customers to the upper level or the basement, where there are ‘MORE SHOPS’. Other notices are cautionary.

The typeset on a small orange page, covered in plastic protection wrap, is repeated at several points in the mall. It exclaims ‘Joburg Mall OWN RISK!! Please be advised that the management is not liable for loss, injury or damage while visiting the property’. The other most common sign reads ‘NO returns, NO refund, NO guarantees, NO exchanges’. And so the written words imply that the landlord and tenant in this building share an aversion to risk.

In reality, numerous risks and myriad opportunities drive this entrepreneurial enclave that has grown to fundamentally transform the land use, building form, use of public space and the economy of ‘Jeppe’ in little more than a decade. It may well be an enclave that signals a new retail typology for Johannesburg. To date, the limited academic attention paid to the area has included architectural and interdisciplinary student research, writings by Le Roux (2009) on the built form and coffee shop culture and a masters dissertation that has profiled the area as a comparative site of study within a research focus on Somali entrepreneurial space in Johannesburg (Thompson 2012).

The current paper explores the interrelationship between the spatial and economic factors that define this retail enclave. The primary purpose is to describe and surface select aspects of these interrelationships. The secondary purpose is to describe the multiple risks that face entrepreneurship in this area. This is done with reference to the spatial context of the inner city with particular emphasis on this space as a port of entry for foreign migrants; the economic context of a form of ‘globalisation from below’ wherein the sale of Chinese merchandise is undertaken through particular social and economic practices and the elements of this economic activity that approximate an ethnic entrepreneurial enclave.

Scott and Storper (2014) offer a defence of traditions of economic understandings of cities in terms of broad framing concepts and most notably in relation to the concept of agglomeration. They do not discount the variations between context and cities, but for them, a focus on the particular is limited unless it reflects back and offers insights to the conceptual ways in which ‘workings of urban agglomeration processes and associated dynamics of the urban land nexus’ (Scott and Storper 2014, p. 12) are presently understood in urban studies. The present paper confronts the challenge of reflecting on the generalisable through an engagement with the specific, as posed in the authors’ assertion that ‘… it is only by means of an analysis that begins with the complex spatial dynamics of economic activity that we can arrive at an account of the agglomeration dynamics common to all cities’ (Scott and Storper 2014, p. 6). This suggests that studies of urban space demand both empirical exploration and a conceptual reflection.

In its focus on the particular dynamics in Jeppe, this examination both supports the thesis of agglomeration in shaping the space economy and questions the notion that urban dynamics can be explained wholly in terms of agglomeration. Through an interrogation of the specifics and activities of Jeppe, this paper reveals how more generalisable forces of migration, agglomeration and low-end globalisation are manifesting in and altering urban space in Johannesburg. Because the dense localised activity within Jeppe is intertwined with larger global economic, political and social forms that sustain this form of urbanity. But in its peculiar mix of these factors and its unique spatial locus, it cannot be completely understood in the abstract. Furthermore, it is only an examination of the particular that can offer insights into how people navigate opportunity and challenge in this urban space. There are multifarious actions and dynamics at work in Jeppe that are rooted in decisions made for social, political and personal reasons and that are strategic responses to momentary opportunity that do not neatly fit economic locational logics. The clustering of retail uses for comparative advantage in Jeppe may be explained by agglomeration, but an understanding of the noneconomic, the spatial and the cultural factors that inform the activities, risks and even co-location in this area requires a more intimate engagement with its workings on the ground. The paper demonstrates the potential of applying an analysis that approximates assemblage—‘an attempt to describe relationalities of composition—relationalities of near/ far and social/material’ (McFarlane 2011, p. 206) to explain an urban space economy.

The paper offers reflections from observations and interviews including 17 in-depth semi-structured and unstructured interviews and many shorter discussions with individualsFootnote 1—including traders, brokers, investors, landlords and employees operating in the area during 2011 and 2012. Observation has involved walking the space, spending hours with individual shopkeepers and other agents in the area in order to trace their daily activities and conducting informal conversations with people about their activities within the area.

Post-Apartheid Johannesburg as an Arrival City

Johannesburg has been ‘redrafted’ since the 1990s not only by forces of transformation that challenge apartheid spatial ideologies but also through the risk-taking and expediency exercised by ‘private developers, illicit circuits of capital and trade, migrant populations, laundered money and global events’ (Brenner 2010, p. 80). Space and land use in many parts of the city have been informalised, and appropriated for use and densities that exceed the limits of official plans and policies. Johannesburg has been a pliable receptacle for the changes wrought by these agents and events and it continues to be moulded in dynamic ways as the built form adapts to suit new, often transitory, activities. Migrant entrepreneurialism has been one such force. It is possibly most intensely experienced in Jeppe.

Mbembe and Nuttall (2008) declare Johannesburg to be the premier but elusive African metropolis. The promise of this city, located in a region of highly variable economic opportunity and much poverty, draws people from vast distances to its sidewalks and buildings in search of opportunity. Migrants’ ambition is driven by multiple factors within both countries of origin and Johannesburg and is exercised at considerable risk.

Statistics on foreign migration in South Africa are contested. No reliable methodology exists to verify the numbers of foreign migrants in the country (Crush and Williams 2005). Estimates range from official estimates of 1.2 million foreign-born residents to outrageous exaggerations of over 8 million ‘undocumented’ migrants (a claim noted by Landau and Wa Kabwe-Segatti 2009). Both domestic and nonnational migrants in post-apartheid South Africa are increasingly attracted to urban areas. Nonnationals are concentrated in certain cities with 7.9 % of Johannesburg being foreign-born and a number of inner-city areas close to or above 50 % foreign-born including documented and undocumented migrants as well as refugees and asylum seekers (Landau and Wa Kabwe-Segatti 2009). Economic variations in Southern Africa are a major factor in attracting Africans seeking to escape poverty or to capture opportunity in South Africa (Gebre, Maharaj, and Pillay 2011). Many of these see South Africa not necessarily as a destination but as an option for onward journey to Europe, North America and Australia (Landau and Jacobsen 2004; Landau and Wa Kabwe-Segatti 2009; Thompson 2012). Some engage in circular migration.

Cross-border movement is not limited to migration. Cross-border traders from both neighbouring countries and from African countries further north make regular trips to and from Johannesburg to buy and sell commodities (Simone 2004). They are part of the transnational movement of people creating and retaining social, economic and political linkages in both host and home country. In these ways, ‘Human mobility in all its forms continues to transform the country’s population and economy as never before’ (Landau and Wa Kabwe-Segatti 2009, p. 1).

Johannesburg is undoubtedly an arrival city in Saunders’ (2011) framing of the term, a place where migrants, many of them rural, with ambitions fixed on the symbolic city and its opportunity, engage in monumental struggles for survival or to establish a financial or spatial foothold for their dependents. In this process, they create urban spaces with distinct networks of relationships and functions that are the imagined and in many instances actualised loci of transitions from poverty. Winkler (2012) describes how the inner city of Johannesburg and specifically the neighbourhood of Hillbrow functions as a port-of-entry neighbourhood, exhibiting cultural diversity and ‘temporal succession’ as multiple people enter the space to find a foothold, strengthen networks and, in many cases, accumulate the means for onward movement elsewhere.

A combination of spatial configuration, of regulation and absence of regulation and of transnational economic circumstances are making it possible, albeit at considerable risk, to open a business in parts of the city, and this phenomenon is worthy of attention for ‘(s)mall businesses … are at the heart of almost any successful arrival city, and their absence, or the presence of laws that keep immigrants from opening them, is often the factor that turns arrival cities into poverty traps’ (Saunders 2011, p. 29).

Johannesburg’s inner city has hosted migrants for all of its existence and is well steeped in transience—located at the centre of this ‘ever-changing metropolis’ (Murray 2008). Here, informal and small businesses owned by migrants are a distinctive part of the local economy (Peberdy and Rogerson 2000). The inner city offers spaces that are exquisitely suited to arrival and appropriation. Auster and Aldrich note that ‘uneven capitalist expansion has left in its wake many reservoirs of resources, which small business owners have managed to manipulate into economic strongholds’ (1984, p. 41). The reception opportunities (Zhou 2004a) in Johannesburg include the availability of space in underutilised buildings that have outlived their usefulness as office towers, as well as relatively high levels of infrastructure and logistics support (Rogerson 2002, 2004).

Migration to Johannesburg can be a journey and life-choice filled with danger. Migrants may be handled by smugglers and may face abuse at the hands of these and of officials in the countries through which they pass as well as in South Africa.Footnote 2 Within South Africa, official attitudes to migrants are ambiguous. Limited rights and ignorance about the rights of foreign migrants translate into a hostile environment for nonnationals in South Africa. Landau and Wa Kabwe-Segatti (2009) describe restrictions on access to employment and market opportunities, accommodation and social services that face nonnational migrants. And across the country, South Africans have waged antiforeigner violence on numerous occasions. In Johannesburg, this sentiment flared into large-scale attacks on nonnationals in May 2008 when an attack on foreigners initiated by a gang of young men in Alexandra township sparked days of looting, murder and rape in several parts of the city and country (Hassim, Kupe, and Worby 2008).

Yet they continue to come. And an increasing number of Ethiopians has joined the wave of migration to Johannesburg. The drivers of migration out of Ethiopia are complex and include a combination of economic and political factors. Endemic poverty in that country, with a Human Development Index of 0.0363, which ranks Ethiopia 174 out of 187 countries, is clearly a key factor. Most Ethiopians cite limited economic opportunity as a driver for their migration (Gebre et al. 2011). In addition, insecurity, with threats and actual political oppression of groups, notably ethnic Oromos, is a key reason for leaving Ethiopia. Many of the newly arrived Ethiopian migrants fled their home country following the 2005 controversial election results and violent repression in that country. That repression was coupled with the state’s massive contraction of financial support to rural peasants—who had voted for opposition parties in great numbers (Schaefer 2011).

Globalisation from Below

Extreme institutional and language barriers inhibit the entry of migrants—including Ethiopians—into the formal job market (Gebre et al. 2011). But considerable opportunity for retail lies in the underdevelopment of formal retail in much of sub-Saharan Africa. It is a space that has readily been occupied by small and informal business, much of it operating below the radar and without the support of formal financial, taxation and trading administration. An increasing number of foreign migrants in South Africa are involved in micro-retail activities including street vending, hawking and petty trading (Gebre et al. 2011). The conceptual work on ‘globalisation from below’ (Portes 1997; Mathews and Yang Yang 2012) is instructive in understanding this activity on the streets of Johannesburg’s inner city. Low-end globalisation can be defined as ‘the transnational flow of people and goods involving relatively small amounts of capital and informal, sometimes semi-legal or illegal transactions commonly associated with the developing world’ (Mathews and Yang Yang 2012). Immigrant transnational entrepreneurs, operating in spaces with little or no regulation, but using the same technological innovations and transportation that support industrial restructuring, participate in the cycles and circulation of economic trade (Portes 1997). ‘Transnationalism’ denotes the ways in which immigrants develop intensely networked social fields that span geographic, cultural and political borders and connect home and host societies through multifarious linkages (Portes 1997; Basch, Glick Schilier, and Blanc-Szanton 1994).

In describing an intense site of low-end globalisation—in Hong Kong’s Chunking Mansions—where African traders source cheap and counterfeit Chinese goods (mostly mobile phones) to sell in their home countries, Mathews (2011) asserts that the lack of enforcement of labour laws, copyright laws and restrictions of the developed world contribute to the possibility of affordable access to commodities. Without this gap in law enforcement and without the extraordinary spaces that harbour the distribution points of cheap Chinese goods, citizens of Africa would be excluded from globalisation. In fact ‘China plays an essential role in manufacturing the goods of low-end globalization … China is a major supplier of cheap and often counterfeit goods … manufacturing goods that are often smuggled, transported through all the various means available in the informal economy’ (Mathews and Yang Yang 2012, p. 98).

Agglomeration

The spaces within which these intense and dense economic exchanges occur are sites of agglomeration and Jeppe represents such a site. Scott and Storper explain that the co-location of activities and people for economic benefit that is known as agglomeration ‘occurs because activities like these entail divisions of labor and other interdependencies as expressed in transactional relationships whose costs are distance dependent and because they can reap functional synergies by clustering together in geographic space’ (forthcoming, p. 4). They add that this co-location offers efficiency that is bolstered by infrastructure and services and is a central feature of urbanisation. The inner city of Johannesburg played the role of an economic hub for manufacturing, banking and public services. This role began to decline in the 1980s (Tomlinson and Rogerson 1999) as property investment was withdrawn and suburbanised and the benefits of agglomeration in the inner city subsided. The decline in investment was coupled with increasing building degradation, service delivery failures and crime (Kesper 2003). The continued importance of the inner city as a site of retail and of small-scale manufacturing prompted formalised strategies for the promotion of a garment sector that would take advantage of the vertical and horizontal linkages that accompany agglomeration (Kesper 2003). Less attention was paid to the informal and incremental growth of another garment industry—the retailing of Chinese manufactured clothing and apparel that would flow into the inner-city economy in the early 1990s. As this paper describes, that economy exhibits the features of an agglomeration economy that has emerged outside of the purview of the state.

Ethnic Enclaves

While there is much ethnic mixing in informal trader spaces in Johannesburg, there are also emerging spaces that approximate ethnic enclaves of business activity. Jeppe is emerging as a largely Ethiopian trading space, but as Thompson’s (2012) research into Somali business activity centred in Mayfair (west of the inner city) points out, neither this nor other ethnically dominated spaces of trade in Johannesburg have been conceptualised in academic literature as ethnic enclaves.

Kaplan and Li outline the criteria for identifying an ethnic economy: ‘ethnic ownership, employment, customer base, sectoral specialization, and spatial concentration’ (2006, p. 5). The extent to which such economies operate in parallel to or with a degree of integration in the mainstream economy varies. The key distinguishing feature within these economies is their spatial concentration of entrepreneurial activity (Zhou 2004b; Kaplan and Li 2006). Zhou (2004a) also traces concepts of ethnic solidarism and the role it plays in the regulating of intra-ethnic competition, the mobilising of resources, price setting and the collective reinforcement of norms and values. These are useful signifiers for analysing Jeppe as an ethnic enclave and ethnicity factors powerfully in the interconnected spatial and economic dynamics of the area.

The Spatial Configuration of Jeppe

Johannesburg’s receptiveness to migration and its malleability in the face of low-end globalisation are manifest in the unique spatial fabric of Jeppe. The precinct comprises more than six full city blocks in the north-eastern quadrant of the central business district (see Fig. 1).

Fig. 1
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The Ethiopian Quarter or ‘Jeppe’ occupies several Johannesburg inner-city street blocks. Copyright: Bronwyn Kotzen

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It is a location that is proximate to rail and taxi services that serve cross-border traders. It consists of high-rise towers of office space that succumbed to suburbanisation of white-owned business in an economically and politically unstable post-1976 Johannesburg.

The Jeppe precinct is unique in Johannesburg (Le Roux 2009) and may be unique in the country. The street blocks that hug Jeppe and Bree streets in an area immediately south of Park Railway Station and taxi hub have not altered in configuration since they were laid out in 1887 at the dawn of Johannesburg’s gold mining history (Beavon 2004). Their tightly packed 62 m-by-62 m grid was delineated to serve the needs of what was expected to be a temporary camp. As the city’s fortunes grew and high-rise buildings replaced the compact structures towards the mid-twentieth century, this part of the inner city developed as the medical zone of Johannesburg. Custom-designed buildings catered to general and specialist medical practitioners. A flight to suburbia from the late 1970s left many of these buildings abandoned, decaying and in some cases appropriated as overcrowded residences. Since the early 2000s, offices and medical suites in this precinct have been repurposed, first incrementally and then at a tumultuous rate, into a multitude of tiny shops, with hundreds of cupboard-sized shops wrapping the street level of every block and many more occupying up to six floors of these modernist medium- and high-rise buildings that still look to the passerby to be office space. But Herbots et al. note that these high-rise buildings ‘provide neutral containers; objects which have a certain degree of indeterminacy which made it fairly easy to change the uses of these buildings’ (2012, abstract) (see Fig. 2).

Fig. 2
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Schematic diagram of multiple land uses that occupy the typical modernist buildings in ‘Jeppe’. Copyright: UrbanWorks Architecture and Urbanism

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Now the area is a series of high-rise shopping malls that are invisible to those who do not use them and are primarily traded by foreign migrants, many of them Ethiopian. They lease space for micro-retail outlets or are employed by co-ethnics in shops located within buildings. Informal trading stalls lining many sidewalks in the area are run by Ethiopians, Nigerians and migrants of other ethnicities. ‘The Ethiopians’ appropriation of the high-rise architecture … enables them to maintain ground-floor interaction with locals and other immigrants while keeping the bulk of their goods safe from police confiscation and from other possible efforts at theft’ (Thompson 2012, p. 101).

The escalation of trade and subdivision of trading space in the area is exponential. Where Thompson (2012) records that in 2011 there were up to 70 shops in a high-rise mall in this area, I counted 112 trading spaces in the same building in 2012. While access and definitions of trading space (some shops are subdivided) may account for some variation in accounting, a rapid increase in the number of shops is evident throughout the area.

Jeppe exists within a context of institutional blindness. The city of Johannesburg has offered substantial support to micro-enterprise in the so-called fashion district, an adjacent precinct that is defined by garment-making and associated services. More generally, the city has developed a range of economic and spatial policies aimed at bolstering the fast growing informal and micro-enterprise (Rogerson 2004). Cross-border shopping in the city is recognised as a substantial economic activity. Even in 1999—before the flood of Ethiopian entrepreneurs took hold in the Jeppe area—it was estimated that in 1 year, visitors from African countries spent more than R1.4 billion in Johannesburg (Rogerson 2002). The numbers of traders and trading spaces have vastly escalated since then, with the city’s spatial development framework for the western portion of the inner city citing figures of 400,000 to 500,000 cross-border traders contributing up to R17 billion annually towards the city’s economy (City of Johannesburg 2010).

Yet Winkler (2012) demonstrates that the focus of the city’s attention on inner-city rejuvenation has to date conceptualised improvement as being focused on attracting formal private sector investment into the inner city, while the vital port-of-entry functions, including migrant entrepreneurialism, are overlooked by local policy. The majority of current uses in Jeppe have been created outside of official municipal planning and economic development frameworks. This is the setting for the high-risk intense emerging ethnic entrepreneurial enclave. Within it, retailers confront, adapt to and defend against multiple risks as described below.

Competition and High Rentals in an Intense Urban Space Economy

The colloquial naming of this shopping precinct as Jeppe is an interesting appropriation and expansion of the title of the key street in this area and a signifier that this shopping experience is intertwined with the geographies of movement (Zack 2013). The area serves a customer base of thousands of local and foreign hawkers and consumers that depend on taxis and trains transporting people from as close as the outskirts of Johannesburg to as far as Kinshasa. Seven days a week, they shop for clothing, home ware and groceries in Jeppe. The goods are predominantly imported from China. Police surveillance has reduced the visible amount of counterfeit goods on display. But one interviewee concurred with Matthews’ (2011) conclusions about low-end globalisation: He recalled that during the 2010 FIFA World Cup, original Bafana Bafana shirts cost R700, but South Africans could not afford that, so the Chinese brought in cheap shirts. Ethiopian traders supplied these at low cost, less than R100 per shirt. ‘People could afford that; they could all wear Bafana shirts. We helped the poor and they were happy’ (interviewee 1).

This is an agglomeration economy of exquisite intensity. In her efforts to sell packs of socks, Berta MergiaFootnote 3 faces competition from other providers of similar or alternative goods that vie for the purse of the passing customer. Her shop is located at the confluence of two narrow corridors that extend through two recently interlinked buildings. Nine shops front onto the shorter corridor and, including hers, 12 shops and 12 stalls (trading spaces that have no dedicated entrance but that occupy corridor or wall space) occupy the corridor that extends from Jeppe Street to Bree Street. Yet more shops and stalls are found in the basement and on the first floor. Altogether there are 162 retail outlets occupying just 3 floors of these 2 contiguous buildings, both of which offer access from Jeppe Street. Customers walking along the northern side of this block of Jeppe Street move along a narrow retail avenue. They have a choice to shop at any of the four ‘malls’—multi-shop interior spaces or the many cubicle shops that front directly onto Jeppe Street or the less formal hawker stalls that face inwards from the sidewalk edge. Along a distance of 62 m, customers have effective access to 283 retail outlets. And this is only a fraction of the shopping space in Jeppe. Sharing the costs of delivery, storage and security are key advantages of co-location in this area.

The carving up of minimal shop spaces is one of the spatial ways in which retailers and landlords disregard official spatial regulation in order to pursue business. Jeppe is compressed and its rentals are astronomical. The high demand for floor space has pushed rentals up and squeezed shop sizes to a minimum. Cubicle shops that occupy no more than 2 m2 are rented out at amounts of R2000 per square metre (interviewees 2, 3 and 4), compared with a rental level in the body of the inner city that is under R180 per square metre (Zack 2013). These rentals are supplemented with the payment of goodwill or ‘key money’ that may run into several R100,000s. In Jeppe, the payment of key money is talked of as normal Ethiopian business practice. Many tenants pay the money in instalments over months or years.

Creative risk management strategies have been devised by the shopkeepers through the reworking of building configuration. Sometimes, one large shop is carved into a series of smaller shops. At other times, an additional glass counter is brought into the shop and is sublet to an independent retailer of mobile phones, jewellery or perfume.

Low Profit Margins

The small shop sizes present challenges to shopkeepers aiming to attract attention. Berta manages the extreme spatial confines of her shop through appropriating additional space. The shelving she has erected up to door height on either side of her shop now extends the frontage to almost 3 m. On these shelves, she displays hundreds of cosmetics; grooming aids; pieces of underwear; household products and small items such as clothes pegs, toothpicks, batteries and locks. Her husband says, ‘The way we make money is to spend on a small thing. If you can sell a lot of small things with small profit you can make more’ (interviewee 2).

The profit margins per item in Jeppe are exceptionally low. Shopkeepers talk of profits of R1.00 and R1.50 on most items. I observed Berta’s shopkeeping over a 5-h period. In this time, her sales amounted to R6000, of which her profits were approximately 8 %. In an 11-h day, she expected to make a profit of R1000 (interviewee 5).

On the narrow corridor to which Berta’s shop is attached, several other shops sell the identical supplies. The high levels of competition have levelled prices and there is no price advantage for shopping at one stall rather than another. Comparative advantage is extracted in those momentary spaces where a retailer stocks an item that is unavailable at another shop.

Adjusting to Market Shifts Through Diversification

As competition eats into profit margins, shopkeepers in Jeppe hedge this risk by reducing overheads, by taking on new business opportunity, by specialising or through differentiation. As one shopkeeper said, ‘This year I have no storeroom because business is down. Because there are too many shops, there is too much competition. I stock (sic) every day’ (interviewee 2). He had given up the cost of storage in favour of daily restocking on those items that moved more rapidly from his shelves. He was looking at new products and new ways of doing business. Occasionally, it is possible to offset the extremely small profits on some items with higher profits per item, particularly when a prized item can be obtained. For such items, it may be worth running the gauntlet of the customs police by holding counterfeit goods, or it may even be worth travelling to China to import goods directly (interviewee 2). ‘And so,’ Teddy said, ‘that’s why I need to go to China. I need to open new ways of doing things and to find different stock’. This surprising act of a small entrepreneur managing the anticipated threat of a saturating market by seeking opportunity beyond the borders of his new host country is consistent with research that shows that migrants with bicultural literacy and binational experience are more likely to take up the opportunities created by globalisation (Zhou 2004a).

The taking on of new risk as a strategy to face down competition is not unusual in this area. Once profits become established enough to allow for the employment of a shop assistant, an owner of a small shop may seek out a second shop along a different street in Jeppe. Different goods may be supplied from the second outlet. One shopkeeper may be trading simultaneously in clothing, footwear, household goods and cosmetics, from several different locations (interviewee 9). As competition intensifies, risk is also being managed through greater attention to specialisation. There are signs of differentiation in goods and quality along certain streets and in particular malls.

Diversifying into specialist goods is not risk-free. Sem is a retailer who has built his trade up over almost a decade. He now specialises in household goods. His new business is lucrative. He is importing directly from China and able to wholesale to Ethiopians and others in Jeppe, in greater Johannesburg and as far as Durban and Lesotho. He has regular customers and his supply is formalised. But, ironically, his goods are at risk because of their high quality. They look like a brand name plastic ware. Sem has faced threats and several raids from patent attorneys, even though the goods are authentic and are not a counterfeit of the brand (interviewee 9).

Fluid Boundaries Between Functions as Single Retailer Carries All Risk

There is a constant movement of goods in this fluid economic space where wholesale, retail and storage activities are not segregated and where individuals may undertake any combination of these activities as the opportunity arises. Shopkeepers are in many instances the sole proprietor and undertake all the business functions associated with their shops. Any event of illness or personal crisis renders the entire functioning of the business vulnerable.

And the high-risk, quick-return formula of trading here relies on managing the interconnected spatial, regulatory and cost risk. So a hawker may leave her stall in the care of the adjacent shopkeeper while she runs to another shop or to a storeroom to get additional supplies of a shoe. She can manage the risk of holding additional stock or of having counterfeit shoes or t-shirts confiscated by the police through holding only as much stock as is required to show her ‘samples’ to customers. She then buys more as required from a secure supplier in the area, adding a small mark up on each item. She saves delivery and storage expenses (interviewee 7). This business practice relies on a network of relationships in which comparative advantage is information and relationships of trust that will secure access and even credit.

The practice of bulk sales and of wholesaling in this apparently retail space is facilitated by the relationship between confined display space and larger storage space. The layers of shop front and nearby storage allow for a range of styles, qualities and quantities of goods to be accessed at very short notice (interviewee 7; interviewee 10).

Cultural Capital and Its Defensive Role

The success of ethnic entrepreneurialism here hinges both on the size of the ethnic population and the size of the consumer population, preconditions noted by Aldridge and Waldinger (1990). Wilson and Portes (1980) point to the dependency on ethnic customers in the early stages of the development of ethnic enclaves. While there are significant and increasing numbers of businesses and services that cater almost exclusively to the Ethiopian trader community, most entrepreneurs are reliant on a customer base that is external to this community. The ethnic population as a consumer base in this retail enclave is possibly less important than the social capital roles it plays.

Although Ethiopians in Jeppe report less direct attacks than for example Somali business people in the city do (Thompson 2012), they nevertheless face the risks of conducting business as migrants in Johannesburg. Interviewees indicated that they face social risks that range from being targeted through xenophobia to criminality and to risks of assimilation.

Agglomeration of co-ethnic entrepreneurs offers a defensive space for migrants arriving from Ethiopia in a strange city where language barriers and intolerance combined with unfamiliar laws and modes of business practice make navigation difficult. This is also a site of employment for new arrivals who work as shop assistants or informal traders connected with the more structured ‘shops’ that operate within buildings in Jeppe. One retailer remarked, ‘Our community has a language problem. So we are not comfortable to move out away from one another. If we are separate we can be attacked, we need the security of being close’ (interviewee 6).

Cultural capital features in social support, the reinforcement of ethnic and cultural tradition and collective financing. Informal group-based insurance strategies are not uncommon coping strategies of poor and migrant households and are typically linked to a support network. This shock-absorbing practice is aimed at smoothing marginal utilities across members of the group, so when one member’s income falls, others transfer resources to rebalance marginal inequalities (World Bank 2000). Most Ethiopian retailers in Jeppe are pooling some of their financial risk through the use of the customary practice of Ekub, a voluntary rotating credit and savings scheme whose members make regular payments into a pooled pot and from which each member draws money in turn. Typically, a retailer will participate in a savings club with seven or nine others and each will contribute a fixed amount daily. The pool will pay out in a 10-day cycle.

Cultural links are kept alive in the adoptive home as familiar foods, clothing and ceremonies can be accessed from shops and spaces within the buildings of Jeppe. The ethnic ties that oblige people to assist one another may be national—with Ethiopians providing assistance and various types of help with interpretation to newcomers—or they may be parochial—with people from the same village or tribal affiliation offering protection and passage into the working environment for newcomers who are introduced by acquaintances who may be in Johannesburg or in Ethiopia. But the economically driven nature of this enclave means that cultural linkages forged in this area more closely align with Appadurai’s (2004) associations of culture with aspiration and with collective and individual futures than a ‘pastness’. Through cultural networks in Jeppe, a newcomer may access a job or, if he/she arrives with monetary means, may access a trading space. Credit, introductions to suppliers and access to informal banking and savings networks as well as to other services will be available within this migrant community.

Risk of the Law and from the Law—Illegality and Criminality

This ethnic agglomeration also offers a defence against the risk of theft or attack. A stallholder from Eritrea said she is in Jeppe because ‘my people are here and no one can harm me, I don’t worry about crime because even if they steal something my people will help me, they can catch the person or protect my life’ (interviewee 8).

As a city with extremely high crime rates, Johannesburg confronts retailers in the cash micro-economy of Jeppe with myriad risks. Hold-ups and muggings are not uncommon and both customers and shopkeepers face the threat of having their wares and money taken at knifepoint. But the growth of this economic activity has been accompanied by an ability to counter some of this threat. The paid security presence within several malls and along the streets is highly visible. Many shopkeepers contribute through their rentals as well as through additional levies to private security (interviewee 2).

However, the ubiquitous tale told of the safety risk on the streets of Jeppe centres not on knife-wielding muggers but on officers of the law. The lines of formality and informality are blurred in this precinct (Zack 2013). Much of the activity is unregulated. Light (2004) notes that informal activity is characterised by bending, manipulation or even violation of laws and regulations that might incur additional cost and complexity to business activity. In Jeppe, the evidence of informality is embedded in the sorts of goods sold, the nature of business transactions and the use of space. The blurred boundaries of informality and formality expose this area to high levels of vigilance by law enforcers and those who exercise exploitation under the guise of law enforcement.

The presence of officialdom in this part of town is primarily a metropolitan police presence. Officially, these officers may be managing traffic congestion or by-law contraventions or they may be accompanying city officials or South African Revenue Service and Customs officials on raids of counterfeit goods. Unofficially, the officers of all these law enforcement agencies are known here for massive extortion. Direct bribes may be extracted against the threat of the confiscation of goods or the removal of asylum-seeking papers. And an often-repeated story is that of officers who enter shops and confiscate counterfeit goods only to return an hour later and offer these goods back ‘for sale’—at a cost of many thousands of rands—to the same shopkeeper. The payment of bribes (known as ‘cool drink’ in Johannesburg) is a risk amelioration strategy on the part of stockists of illegal, highly profitable, counterfeit clothing and footwear. It is also a strategy that offers protection from the risk of deportation for undocumented migrants who work the area as shop assistants, hawkers and head porters. Intertwined relations of complicity in protection from law enforcement extend to conditions of employment. Light (2004) notes that ignoring employment regulations helps to minimise costs in informal business as these businesses focus on maximising production and income. Business owners in the area face and perpetuate high risks of labour uncertainty and illegality. Exploitative working conditions hold for the employment of many fellow Ethiopians as well as other African migrant workers as shop assistants, machinists and porters in Jeppe.

Low-End Globalisation—China Meets Africa in Jeppe

High levels of competition are not only internal to the community of Jeppe. At a citywide scale, these entrepreneurs compete with other micro-retailers and with Chinese wholesalers operating from warehouse-type stores close to the inner city.

The dependency path of Ethiopian retailers purchasing from Chinese wholesalers (who also sell directly to migrants and hawkers) is a finely tuned arrangement. It mitigates the risk of competing with new entrants outside of the ethnic retail enclave. Multiple relations of trade exist between Chinese suppliers and Ethiopian traders in Johannesburg. It is a dense and intimate economic relationship centred on commodities being sourced from China by Chinese wholesalers and directed to Ethiopian traders. Ethiopian shopkeepers protect this territory and carve comparative advantage in the wider city by having preferential trading relationships with Chinese wholesalers. They are likely to be offered preferential rates, credit and favourable repayment terms. A shopkeeper indicated that some Chinese wholesalers would stock an entire shop in Jeppe on credit (interviewee 9). Others tell how a Chinese trader may close the doors to her shop in one of the China malls while an Ethiopian trader negotiates for stock, presumably because she does not want the preferential prices that she will offer this prized customer to be known to other traders. Chinese wholesalers gain the benefit of secure demand for their goods that are ‘moved’ at a high pace by Ethiopians willing to take the higher risks of locating in Jeppe and willing to manage the risk of low profit margins by breaking bulk, selling small quantities of goods to a multitude of customers. As one trader noted, ‘Chinese people will give us discounts. We are taking their stock to town for them so it’s an opportunity for them. We can sell it and other shopkeepers see it here and also buy from them’ (interviewee 9).

Ethiopian retailers are also able to on-sell goods to one another and so insert another layer of small profit-taking in a fast-paced supply chain where minuscule profits are shaved off at multiple intervals.

Middlemen also extend the supply chain. Many of the men who are seemingly just ‘standing around’ on the streets of Jeppe are engaged in networking. Some are intermediaries or brokers in property or in goods and through them retailers and would-be shopkeepers can access suppliers, leaseholders, shopkeepers who are willing to sublet or lease whole shops as well as other allied services in the area. There is a portion of Jeppe Street that is frequented by skilled brokers and that is laughingly called ‘Facebook’ by those familiar with the skilled brokers renowned for their connectedness and ability to access anything immediately. Retailers who need stock of a particular item at short notice can go to these men.

Brokering in Jeppe is a tough task. It is a task that employs the comparative advantages of social relations and information in order to mitigate the high levels of competition. But in a space that is socially and culturally constructed and where information is so transparent, carving a competitive edge is challenging. Brokering offers low barriers to entry but strenuous competition from fellow brokers and from the fluid practice of retailers who themselves engage in brokering. Moreover, retailers often use a mix of direct sourcing and working with these intermediaries.

Each day, many brokers will visit shops in the area. They are likely to be carrying one or two items. I watched Absalom showing pocket lighters to shopkeepers in the Joburg Mall. Most pointed out to him that they already had similar stock and in fact carried a range of lighters of different qualities and sizes. It became apparent that he had brought a sample for which there would be little demand. This ‘newcomer’ would have to learn the ropes.

The broker is mobile. He moves between Jeppe, China malls and may go further afield when the competition is too high or an opportunity presents itself. He will also find micro networks in each location. So he builds a customer base with ‘people of my country’ (interviewee 10). Absalom also told me that he builds relationships with a group of suppliers who may extend him credit.

The days of such a broker will consist of intense networking within the Jeppe community to make contacts and build trust. He will also work on creating networks within the China malls around town. There he will try to establish relationships and also research what items are likely to sell, the comparative prices of items, the quantities, qualities and colours available. As he becomes more experienced in reading the market in Jeppe and in building a relationship with suppliers, he may bring samples back to Jeppe customers. The craft lies in the ability to secure exclusive access to an item that is expected to sell well. This is important amongst tiny shops that need to maximise exposure to the range of items they stock and have difficulty in ‘hiding’ unusual and exclusive stock. And so, speed up matters. The ability to locate a new item, to secure a buyer in Jeppe and to deliver that item for display before another broker can do so, requires swift action.

An experienced broker who has established trust with both his wholesale supplier and his shopkeeper-customer in Jeppe may ask the wholesaler to remove a prized item from display while he rushes by taxi to Jeppe. There he secures an order and a cash deposit that will ensure he can reserve some or perhaps all the stock of that item which is held by the Chinese wholesaler. These items will be brought to Jeppe and for a while at least the targeted retailer will be the sole provider of these items and will on-sell them to other Jeppe retailers or to his customers. The customer base is a mix of consistent and trusted customers who are purchasing bulk goods on a regular basis and those who buy opportunistically. These are further divided into those who buy bulk amounts and those who are purchasing small amounts. It is not obvious which retailers are selling small items directly and which are selling bulk and most often one retailer is doing both.

Changing the Face of Retail in the Inner City

A number of formalised malls, occupying both newly built developments and repurposed buildings, have emerged recently. These exhibit a combination of the characteristics of Jeppe-style trading with small spaces offering shopping on several levels and the characteristics of suburban malls with wide passageways, high-intensity lighting, controlled access points and inward-facing shops. The developments comply with city regulations. In this way, Jeppe is rapidly altering the face of retail in inner-city Johannesburg. Even beyond the boundaries of what may loosely be known as the Ethiopian Quarter, building renovations are underway as small-scale retail, mimicking this spatial typology is being carved at ground floor along many inner-city streets.

Conclusion—Imagining Prospects for Jeppe

The urban space economy of Jeppe is an intertwined lattice of spatial and economic forces and interdependencies in which economic imperatives shape and alter space even as they are defined by and adjust to the restrictions and opportunities in the built form. Extraordinary levels of dynamism characterise this ethnic entrepreneurial shopping space, with its ability to innovate, adapt and repurpose space and business practice at short notice.

Retailers in Jeppe face multiple risks as they negotiate this ethnic enclave of low-end globalisation in Africa’s powerhouse. These include risks associated with their location in Johannesburg and in the confined spatial setting of this shopping precinct. The competitive risks associated with business practice in a steaming retail market have increased as more and more shops have been carved into the building stock and as the ease of accessing information and supplies has improved. Profits are reducing and entrepreneurs are being pushed to find new ways of doing business, of cutting costs and of attracting customers whose loyalty rests with fashion and price. Entrepreneurs also face risks as new migrants with often-precarious legal status. Their business practices attest to a willingness to take a high risk in engaging in an intensely competitive fast-paced market with little loyalty and high levels of uncertainty. Within this environment, they are taking on risk-spreading and risk-management behaviours that are economic, spatial and sociocultural.

The Jeppe area fits the descriptors of ethnic entrepreneurialism where social relations, individual behaviours and economic transactions are negotiated and even constrained within social structures (Aldridge and Waldinger 1990). Moreover, it can be considered an ethnic enclave, defined as it is by ethnicity and location as well as by the dependency in these early stages of its development on ethnic linkages (Light and Karageorgis 1994; Zhou 2004b). Reliance on the networks within this enclave for finance, advice, access to employment or sites, and linkages to suppliers and customers offers security and stability in the face of high risk.

This activity is economically enabling. It is also extractive. Apart from the financial and other irregularities that are not addressed in this paper, but that limit local absorption of the full benefits of this economic activity, the intensity of this agglomeration economy is also exerting strain on physical infrastructure and essential services. Congestion levels are high, many buildings are at increasing risk of dereliction and safety hazards abound. These risks may contribute to a downward spiral in this oversubscribed micro-economy.

The risks of market saturation and competitiveness may overstrain the capacity of the area, or the immense opportunity may push traders and investors towards greater formalisation and a sense of ownership of the built environment. It may come to be in the interest of community to ameliorate competitive risks with further specialisation, diversification and legalisation. This may include attention to spatial risks.

For much of city government, this is an unknown space and its activities are opaque. But it is a phenomenon that the city may ignore at its peril, for this is the centre of a globalisation that is sweeping Africa—the trade in affordable commodities offered at scale for sale across national borders. Johannesburg is the unofficial gateway of these goods to the continent. It can harness and capture that space by supporting it or can risk and constrain it through ad hoc and ill-informed law enforcement, corrupt policing and restrictions on nonnational traders.

At present, there are no economic or spatial plans that address this area or its needs. Until the area is recognised by city authorities for the retail mecca that it is and until the rands flowing through this area every day are considered valuable and not dismissed as ‘leakage’, there can be little alignment with the profit-seeking needs of entrepreneurs and any municipal intentions. The absence of recognition may be unconscious on the part of a planning apparatus that is stretched and focused elsewhere, but it is not benign. Roy conceptualises informality as being produced by the state’s attitude to types of transactions and economies in the city and so the planning and legal apparatus of the state that has the power to ‘determine what is informal and what is not, and to determine which forms of informality will thrive and which will disappear’ (2005, p. 149).

The planning responses are not obvious. Is this explosive retail phenomenon a fleeting, transient activity in Johannesburg? Or is this a new feature of retail and indeed a new model of retail and of space-making and repurposing in this city? The opportunities exist for local government to embrace the latter imaginary and to enable the strengthening of this vital contributor to the city’s spatial and economic landscape. What sorts of spatial configurations and densities should be permitted and supported in this space? What are the parameters of health and safety to be applied to the built form? What infrastructure needs to be bolstered in this area? These questions are not beyond the realm of spatial planning. They require attentive focus. They require that policy-makers observe the area, that they pay attention to how it is operating and that they respond spatially with both regulation and incentive that help reinforce and enable this entrepreneurial economy as well as mitigate the health and safety threats that attach to the activity. It requires not so much the application of existing laws and planning tropes in creative ways as it does the creative reexamination of existing relations and planning tropes against the reality of Jeppe.

Interviews

  • Interviewee 1: Male retailer operating from a shop inside a building on Jeppe Street, interviewed by Tanya Zack, August 2011.

  • Interviewee 2: Male retailer operating from small shop on ground floor within a mall on Jeppe Street, interviewed by Tanya Zack, August 2012.

  • Interviewee 3: Male landlord of new, formalised shopping centre on Jeppe Street, interviewed by Tanya Zack, December 2011, April 2012 and June 2012.

  • Interviewee 4: Male retailer operating from small shop fronting onto Jeppe Street, interviewed by Tanya Zack, May 2011.

  • Interviewee 5: Female retailer operating from small shop within a mall on Jeppe Street, interviewed by Tanya Zack, August 2012.

  • Interviewee 6: Male retailer operating from small shop in basement level of a mall on Jeppe Street, interviewed by Tanya Zack, August 2012.

  • Interviewee 7: Male retailer operating from small shop fronting onto Delvers Street, interviewed by Tanya Zack, July 2012.

  • Interviewee 8: Female stallholder, operating along Jeppe Street sidewalk, interviewed by Tanya Zack, March 2012.

  • Interviewee 9: Male shopkeeper, operating from new mall along Jeppe Street, interviewed by Tanya Zack, March 2012.

  • Interviewee 10: Intermediary, interviewed by Tanya Zack, April 2012, May 2012, August 2012.