Spaza or Tuck shops have remained resilient, defying all the odds stacked against them and refusing to die, despite retail giants marching into townships, and Covid-19 battering the economy. Instead, spaza shops, referred to as South Africa's hidden economy, are seemingly expanding from their traditional strongholds into suburbs, and are popping up in less traditional areas of Pretoria West and North. According to Trade Intelligence (TI), in terms of South African grocery retail, up to 40% of total food bought by consumers each year comes from informal traders such as hawkers, small and larger spaza shops, and midi wholesale traders,…
Spaza or Tuck shops have remained resilient, defying all the odds stacked against them and refusing to die, despite retail giants marching into townships, and Covid-19 battering the economy.
Instead, spaza shops, referred to as South Africa’s hidden economy, are seemingly expanding from their traditional strongholds into suburbs, and are popping up in less traditional areas of Pretoria West and North.
According to Trade Intelligence (TI), in terms of South African grocery retail, up to 40% of total food bought by consumers each year comes from informal traders such as hawkers, small and larger spaza shops, and midi wholesale traders, who service 77% of the population.
And despite the sector constantly being confronted by seemingly crippling challenges, Natasha Smith, TI managing director has noted that it is a resilient one, with a total value estimated to be worth R157 billion in 2019.
Resilience
Smith said just over a decade ago, many within the fast-moving consumer goods (FMCG) sector believed informal trade was dying, as the major corporates were extending their reach into previously underserved areas at a rapid pace.
“However, significant stumbling blocks stood in the corporates’ way – poor infrastructure into these areas made the business of building and stocking stores arduous, regional differences meant that what worked in Mamelodi could not automatically be rolled out in Umlazi. This left the door wide open for informal traders to survive, and in many cases thrive,” she said.
Smith said then there was the Covid pandemic shaking up the world and the Spaza shop sector and that the impact on the informal trade has been far more devastating.
Those that clung to life were clobbered down by the recent unrest in Gauteng and KwaZulu-Natal, the exact extent of which is still being calculated.
According to a report from Yebo Fresh in collaboration with Ask Africa, one in three spaza shops experienced looting, nearly 80% of spaza shops lost more than half of their stock, and 87% of spaza shops require capital support to resume trade.
But the informal trade’s staying power has been the ability to respond to shoppers’ needs for affordable and close to home solutions that the formal retail chains did not fulfil, becoming a pillar of the township economy that enables people to shop at their convenience anytime.
Smith said for sector to rebuild and grow, it was vital that this aspect of “meeting shoppers’ needs” be sustained and developed.
“Trade Intelligence aims to enable collaboration and to this end we have identified certain areas that are ripe for the picking within the trade, opportunities where suppliers, services providers and the traders can work together to enable development within this largely untapped market, made up of as many as 200,000 spaza shops, spazarettes, superettes, midi wholesalers, and hawkers,” she said.
Also, according to Sustainable Livelihoods Foundation, through traditional business networks, the spaza owners, who are increasingly foreign nationals, were able to procure goods in bulk.
This meant they obtain price discounts, reduce transport costs through sharing, secure delivery agreements, and access high demand products such as cheap cigarettes.
More than just a hole in a wall
According to GG Alcock, founder of Kasinomics, an advisory service providing insights, strategies, route to market and consumer marketing to informal township or Kasi markets, while there is a wide range of stores all called spaza shops, the typical hole in the wall spaza shop is very much the bread, airtime, and milk type outlet.
He said there was a massive growth of what he called spazarettes, which are supermarket-type stores which are where the real growth and strength of this sector lies.
“There are about 30 000 of these spazarette type stores versus about 70 000 spazas. The strength of the spazarette sector in these times is proximity to the customer, in the local kasi high street or kasi junctions in walking distance. Malls and formal retailers generally need a taxi to travel to,” he said.
Alcock said the other strength of this sector was that they focus on staples or essentials, including bulk packs such as 12kg maize meal you would not want to carry from the formal retailer.
“They also are ingrained in the community more and more donating food parcels, giving groceries for funerals of customers and so on,” he added.
