Spaza shop comeback with strong sales growth

THE spaza shop is making a comeback despite moves by big retailers into townships and periurban areas in South Africa.

According to a Nielsen study, South African “modern trade” shoppers who also use spaza shops, grew from 45% in 2015 to 53% last year. 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,” Nielsen consumer insights director Esti Prinsloo said.

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 R316.5-billion to March 2017. Traditional trade in urban and rural areas accounted for 22.3%, or R70.5-billion, of this.

“People are reverting to buying 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,” Prinsloo said.

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 8.6% at supermarkets.

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

“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.

Owner of Gross Corner Supermarket in Sebokeng Trully Masinge told the market inquiry panel earlier this month business became tough when Checkers and Spar opened stores nearby.