While the abundance of some plant species decreases under high grazing intensity, others become more abundant. Release from competition by decreaser species contributes to this pattern in mesic systems, but this may not be the case in xeric systems where competition may be less intense. Here we examine three mechanisms that may be involved: (i) increased recruitment and growth because of soil changes produced by grazing, for example, increased soil nutrient availability through dung accumulation; (ii) increased recruitment favoured by the breaking up of the lichen crust; and (iii) reduced competition because of the decline of decreaser species. We used field and glasshouse experiments to determine the possible contribution of these mechanisms to the increase of the chenopod Maireana pyramidata around a watering point in a chenopod shrubland of South Australia. There was no evidence of nutrient accumulation close to the watering point, and while seedlings of M. pyramidata responded to nutrient addition, their growth was the same in soil collected from areas with different grazing intensity. While a broken lichen crust increased the emergence of both M. pyramidata and the decreaser Atriplex vesicaria, the effect was larger for the former. We found no competition between seedlings of the two species or between juveniles of A. vesicaria and seedlings of M. pyramidata in glasshouse experiments. Adult plants of both A. vesicaria and M. pyramidata produced similar growth reduction in seedlings of M. pyramidata. Furthermore, a field removal experiment failed to detect any competitive effect of A. vesicaria on M. pyramidata. Our data indicate that the disintegration of the soil crust by grazer activities can be a major factor controlling floristic changes in overgrazed rangelands. These results imply that factors that control establishment may be more important than competition in shaping shrub population dynamics in these systems. Ground surface itself can affect establishment opportunities, and this should be taken into account in management and restoration efforts in arid lands.