Skip to main content

Spaza shops growing strongly, study shows

| Research tools

The spaza shop is making a comeback despite moves by big retailers into townships and peri-urban areas in SA.

According to a Nielsen study, South African "modern trade" shoppers who also use spaza shops grew from 45% in 2015 to 53% in 2016. 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," says Nielsen consumer insights director Esti Prinsloo.

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

"People are reverting to 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, being conveniently situated on commuting routes and close to shoppers’ homes," Prinsloo says.

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 at supermarkets, it was 8.6%.

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

"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.

Trully Masinge, owner of Gross Corner Supermarket in Sebokeng, told the market inquiry panel earlier in June that business became tough when Checkers and Spar opened stores nearby. "Many people used to buy from my store and we used to work very well. But now people just walk past my store because these big retailers have lower prices — better prices than my shop can compete with," Masinge says.

Pin It

Related Articles

SA retail market pressure prevails

By Nick Paul, Senior Editor, Trade Intelligence.  Did you know that Checkers does R27 billion more turnover than Woolworths Food – a gap that is increasing as the two compete for the disposable income of upper-middle class shoppers? Or that Boxer...

Checkers smashes Pick n Pay in home delivery pr...

By: Myles Illidge - MyBroadband It is cheaper to shop using Checkers’ Sixty60 grocery delivery app for everyday grocery items than to use Pick n Pay’s asap! service, a MyBroadband analysis has revealed.

More than 30% of income for minimum wage earner...

By: IOL The cost of a “survival basket” of food in South Africa at the beginning of 2024 is R1 503, which is 6.07% more than last year, and will see minimum wage earners spend 34.5% of their earnings to buy food.

Three-day weekends ahead? South Africa’s four-d...

By: Xolile Mtembu - IOL The results for the South African trial of the four-day work week model are out and they show a resounding success among companies who participated.

Checkers killing Pick n Pay in home delivery

Daily Investor Pick n Pay CEO Sean Summers said they started home delivery two decades ago but that Checkers took the lead through their Sixty60 service.