Spazas are pulling in the shop­pers

CityPress - - Business - NEL­LIE BRAND-JONKER busi­ness@city­press.co.za

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.

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