Zande’s spaza hypermarket to serve ekasi’s bulk buyers
Fintech firm identifies Orange Farm for first of its physical stores
● In the increasingly competitive retail sector, traders are looking to grab their share of the market in townships and rural communities.
Enter Zande Africa, a fintech company providing credit and logistics solutions for spaza shops around SA.
Zande established itself as an online logistics and finance provider four years ago to enable spaza shop owners to order stock for delivery.
Now it is set to launch its first physical store, a “spaza hypermarket” in Orange Farm, south of Johannesburg.
Siya Ntutela, CEO and co-founder of Zande, said the spaza hypermarket will give surrounding spazas an outlet where they can procure all their stock.
The hypermarket is also hoping to attract other bulk purchasers, such as early development centres, churches and stokvel groups, said Ntutela.
The store will have a bakery, butchery, a pharmacy and in-store ATMs.
“Population density is a big thing; townships like Orange Farm … are getting so dense that there aren’t enough stores to service the communities that are there, because there are informal dwellers that are popping up almost on a daily basis,” said Ntutela.
“Proximity to the customer is one advantage we are giving. We are giving them pricing, we are giving them delivery capability and in not so long they’re going to be able to use technology to interact with Zande to order their products,” he said.
GG Alcock, CEO of Minanawe Marketing, said the South African informal retail sector is growing rapidly, and faster than the formal retail sector.
The township retail industry has about 100,000 spaza outlets, which generate annual revenue of about R150bn. Formal traders, which include SA’s big four retailers — Pick n Pay, Shoprite, Massmart and Spar — generate revenue of R300bn to R350bn a year.
Zande has 1,600 spaza affiliates and plans to have 2,000 by the end of the year. It has two Mpumalanga distribution centres, in Ermelo and Mbombela, which it will convert to hypermarkets similar to the outlet it is opening in Orange Farm. It will retain its distribution operations and also plans to extend its physical footprint across Gauteng in the next 48 months.
“We are looking at the Vaal, Ekurhuleni and Tshwane. We want to be in all provinces in SA; we want to start with Gauteng and
Cash in the township is not going away … we believe in the circulation of cash within the township
make sure that we grow Gauteng as a base,” said Ntutela.
A challenge for the informal retail industry is that it is a R40bn cash market, which Alcock said makes operating online difficult. “Until you have cashless payments or you have less cash in the system, it’s going to be very difficult to do that kind of online shopping,” said Alcock.
Ntutela said: “Cash in the township or in the informal sector is not going away. A lot of people are trying to go digital and cashless but we believe in the circulation of cash within the township. Cash must be able to move from a spaza into Zande, and Zande into a hair salon.”
Alcock said formal retailers are going to continue to be challenged by the spaza-type model.
“The reality is that the cost of transport has become one of the biggest influencers of where people purchase,” Alcock said.
“Increasingly, people want to shop closer to home, so that’s where small spaza types or U-Save ekasi-type outlets are operating more successfully. If they are going to provide products closer to consumers and save them the cost of transport and inconvenience, then that’s a huge opportunity,” he said.
The bigger retailers have in recent years woken up to the thriving informal retail economy, with Shoprite propping up U-Save spaza containers and Pick n Pay partnering with independent traders, whose spazas they help upgrade.
Pick n Pay has about 28 spaza shops run by independent traders and Shoprite has 26 U-Save ekasi stores.