Spazas are pulling in the shoppers
One rand of every R5 spent in South Africa is spent in informal shops like spazas.
A new study by market researcher Nielsen confirms that the idea that the informal retail sector is shrinking due to pressure by modern supermarkets is far from the truth, says Craig Henry, managing director of Nielsen SA.
The study focuses mainly on spaza shops and does not include street vendors. These informal shops sell goods to the value of R46 billion every year.
According to Henry, a third of the packaged consumer goods in the country is sold by these stores.
Over the past two decades, the number of informal shops rose by 100 000. There are now 134 000 in South Africa. Over this period, the population has grown from 38 million to 53 million.
Modern stores also grew rapidly in this period and commercial density as a whole in South Africa has increased. The growing middle class contributed to this growth.
The report shows that informal store sales are keeping pace with modern shops and are growing at about 10% a year, compared with 9% growth in modern stores.
More spazas are now found in urban areas.
The volume of goods sold is growing at 7%, compared with volumes in the modern stores, which are growing at 4%.
It is especially spaza shops that are going through a revolution. Henry says they are more organised than before, and the range of brands and product categories has increased.
The stores are conveniently located on commuter routes and near workplaces, and prices are becoming increasingly competitive, which, Henry says, are just two reasons these stores are increasing in popularity.
The percentage of shoppers who say they have visited a spaza shop in the previous seven days increased from 38% in 2012 to 48% at present.
It’s not just lower-income groups that do their shopping at these shops. In recent years, people from the higher-income groups have been frequenting spazas. This is attributed to worsening economic conditions, which means consumers want smaller packages of a product, which is typical of these stores.
“The sector has undergone a silent revolution from traditional home stores that are more expensive and have a smaller range, to ones where the owners understand their customers, are flexible with what they offer and have beneficial arrangements with wholesalers so that they can be more competitive,” Henry explains.