Since its establishment in 2020, the Spaza-shop Support Programme has funded more than 6 000 small businesses around the country but many shop owners have bemoaned the poor communication around the scheme. Photo: Supplied
People living in South African townships are spending more money at spaza shops than big retailers and supermarkets, and a report says prices offered by the former are quite competitive.
In its 2022 South African Township CX Report, digital marketing agency Rogerwilco says 44% of 1 421 township residents who were surveyed reported spending more at spaza shops, an 11% increase from last year.
Some 22% of the respondents earned between R1 000 and R3 999, 15% had an income of R4 000 to R6 999 while 6% made more than R30 000 monthly.
“Following the lockdown period and the riots that occurred thereafter, we have noticed an increase in the order sizes coming from spaza shops to cater for consumer needs,” Vuleka App chief executive Brian Makwaiba said in the report.
Brian Makwaiba, of Vuleka App, was part of the panel of expert commentators interviewed by Rogerwilco. The Vuleka App is an e-commerce and fintech platform where spaza owners can order stock from their suppliers.
Township residents generally use spaza shops as handy places to buy immediate consumption needs such as a place to get bread and milk while large supermarkets are seen as destinations for the big monthly shop.
During a presentation of the report last Wednesday, Luigi Ferrini, the chief customer officer at Tiger Brands, said spaza shops were quite competitive against the big retailers and were also versatile and effective in terms of payment methods.
“We also found that they stock lines that move quite quickly. The whole point is to try to turn that stock as quickly as possible.” Ferrini said, adding that on average a shopper at a spaza buys 3.6 items and spends R65 on every trip.
In 2017 there were about 142 000 spazas in the country, but this had risen to 150 000 by 2021
Frans van der Colff, an executive fellow at Henley Business School and director at Pick n Pay, recalled how, some years ago, the retail giant had opened a new store in Kliptown, in Soweto to the cheers of customers who were excited about the convenience of its proximity.
“I asked a customer whether they enjoyed shopping with us, she said it’s so good because she saves all her taxi money that she would have spent to go to the mall in South Gate and that gives her an extra R30 to spend. This is the convenience that is provided by spaza shops and we need to protect that ecosystem,” Van der Colff said.
A number of retailers have been trying to penetrate the township economy. South Africa’s largest grocery retailer, Shoprite, launched the Usave ekasi model of outlets made from shipping containers in 2019.
In 2020, Mr Price announced that it was testing smaller-format stores in a bid to get closer to where its shoppers live. The new stores are constructed from containers, similar to those of Shoprite.
Spaza shops and retailers are competing well with each other and seem to be “harmonious”, Ferrini said.
“To think that a couple of years ago as the big retailers were coming into the townships they were closing down a whole lot of spaza stores. However, I think the spaza stores have reinvented themselves and are a very sleek operation. In the peak of Covid-19 we were seeing a 29% growth. They fulfil a different need for the month’s shop and that’s why their survival is crucial,” he said.
Van der Colff echoed this, saying the relationship between retailers and spaza shops was “symbiotic” and there was room for both. Spaza shops need to be given more support to do better “because that feeds directly into the economy of the township”, he added.
Local preference
The report found that 74% of township consumers would consider buying products from local brands as opposed to international brands. Leading that group are people aged 25 to 34 – which account for 39% of the 74%- who said they would be more likely to choose local over international fashion brands.
“There is excitement around our new brands. If you look at shoes such as Bathu, Drip and Iscathulo, it’s all exciting, it’s us, it’s African and it’s cutting edge. I think that’s what’s driving more consumers to purchase local brands,” Van der Colff said.
Asked which brands they would buy using store accounts, if those fashion brands were available, 29% of township residents said they would purchase more of the Bathu shoe brand, founded by Theo Baloyi, while 25% of the respondents showed a liking for the Drip shoe brand founded by Lekau Sehoana. TSHEPO Jeans and Rich Mnisi came in third and fourth place respectively as brands that people would buy on their store accounts.
“It’s so encouraging to see township consumers actively buying local as this creates entrepreneurial opportunities for our students and sets them on a path to become the next MaXhosa,” University of Johannesburg fashion lecturer Tinyiko Baloyi said in the report.
Laduma Ngxokolo’s MaXhosa brand has enjoyed success on the international stage, helping make African fashion brands more global.
“Our young people are just producing the most incredible things and the world is sitting up and noticing. This is all born in the townships. The great culture that comes with it, our own brands with our own culture that we can be proud of staging anywhere in the world,” Van der Colff said.
He said it was one thing to have great ideas and create brands, but young people needed space in the market.
“I do a lot of work in appealing to the big people to please give them space. To include them, give them space in your shops and make sure that our local brands are visible.”
Anathi Madubela is an Adamela Trust business reporter at the M&G.
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