Business Day

Spaza shops growing strongly

- Colleen Goko gokoc@businessli­ve.co.za

The spaza shop is making a comeback despite moves by big retailers into townships and peri-urban areas in SA. According to a Nielsen study, South African “modern trade” shoppers who also use spaza shops grew from 45% in 2015, to 53% in 2016.

The spaza shop is making a comeback despite moves by big retailers into townships and peri-urban areas in SA.

According to a Nielsen study, South African “modern trade” shoppers who also use spaza shops grew from 45% in 2015 to 53% in 2016. Nielsen serves marketers keen to reach African consumers in niche and mass markets.

“Even though spend is still higher in modern trade, there is strong sales growth coming through in traditiona­l trade outlets,” says Nielsen consumer insights director Esti Prinsloo.

SA has 2,500 modern trade outlets, including supermarke­ts, and 140,000 traditiona­l trade outlets, including spaza shops. This contribute­d to annual retail sales of R316.5bn to March 2017. Traditiona­l trade in urban and rural areas accounted for 22.3% of this, or R70.5bn.

“People are reverting to local, as they’re not willing to travel to supermarke­ts due to the rising cost of transport. Spaza shops are ideally positioned for small, top-up occasions, being convenient­ly situated on commuting routes and close to shoppers’ homes,” Prinsloo says.

Nielsen’s Shopper Trends study found that sales in traditiona­l trade outlets that include small independen­t grocers, self-service walk-in outlets and counter-top formats, grew 13.4% over the year to March 2017. Rural outlets grew 2.3%.

Growth in sales at modern format hypermarke­ts was 4.8% in the period and at supermarke­ts, it was 8.6%.

Strained economic conditions in SA are changing consumer behaviour, she says.

PEOPLE ARE NOT WILLING TO TRAVEL TO SUPERMARKE­TS DUE TO THE RISING COST OF TRANSPORT

“The biggest challenge for modern trade outlets is breaking the cycle of reliance on price and promotion to sustain growth. With squeezed margins, retailers will need to look for other ways to drive purchases, loyalty and the overall retail experience to ensure long-term growth.”

The growth of spaza shops and independen­t grocery retailers is under the spotlight in the Competitio­n Commission’s market inquiry.

Public hearings held in Cape Town and Johannesbu­rg revealed that big retailers were perceived to be muscling in on territorie­s that were previously served only by smaller players.

Trully Masinge, owner of Gross Corner Supermarke­t in Sebokeng, told the market inquiry panel earlier in June that business became tough when Checkers and Spar opened stores nearby. “Many people used to buy from my store and we used to work very well. But now people just walk past my store because these big retailers have lower prices — better prices than my shop can compete with,” Masinge says.

 ??  ?? Shoppers’ love for doing grocery shopping
Shoppers’ love for doing grocery shopping

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