Township economy thrives while spaza shops offer better value
As personal budgets get tighter, South Africans are turning to their local spaza shops for better value, a survey reveals.
Now in its third year, the Rogerwilco Township Customer Experience survey polled more than 1,000 consumers living in townships about their spending and saving habits in the current economic climate.
Unsurprisingly, 59.3% of respondents considered price as the decisive factor. Almost a quarter (24.9%) of participants emphasised the importance of a brand’s understanding of their needs, while only 10.4% mentioned advertising as a motivating factor.
Mongezi Mtati, senior brand strategist at Rogerwilco, says spaza shops are adopting strategies such as repackaging products into smaller sizes and offering weigh-and-pay options – catering to customers’ budgets and their current need for value.
The efforts made by spaza shop owners are paying off, with a quarter of respondents reporting that they spend more than half of their income within the township.
There has also been a rise in patronage of local spaza shops, with 51% of respondents claiming to shop at spazas daily, compared with 44% last year.
The highest concentration of respondents who spend more than 50% of their income (60%) in the township are retirees, who are also more likely to spend more time at home. This group is followed by the self-employed at 30% and students at 26%.
CEO of Survey54, Stephan Eyeson, says that within the shopper data, there is evidence of more frequent visits to spazas to buy smaller items with fewer freezer or fridge needs. With extended power blackouts, people’s shopper habits may have changed to ensure that perishable items are bought only when needed.
Eyeson believes this is an excellent opportunity for spazas to gain ground again, compared with last year when there was a rise of larger supermarkets closer to township areas.
However, respondents did note that they were always looking for deals at supermarkets, preferably those located within close proximity to South African Social Security Agency (Sassa) offices and ATMs. This is usually at shopping malls or centres with supermarkets and large grocery stores so that consumers can collect their Sassa grants or withdraw cash and shop for groceries in one trip.
Loyalty to local businesses extends to the fashion industry as well. The popularity of home-grown brands is on the rise among township consumers.
In 2022, 75% of respondents expressed a higher likelihood of purchasing local fashion brands if they were easily accessible through store cards at frequented shops. This year, the survey delved into the actual expenditure on local fashion.
Nearly 17% of respondents reported spending between R1,000 and R2,000 in the past year, with almost 6% investing more than R3,000 in local fashion over that time.
Footwear brand Bathu leads this demand, with 7% of respondents having purchased the brand within the past year, followed by Drip (4.4%) and Amakipkip (purchased by just above 1% of respondents).
The results are an indication of the strong sneaker culture prevalent in South Africa. Both Drip and Bathu are leading local sneaker brands, while Amakipkip markets itself as “South Africa’s leading streetwear godfather”.
Bathu and Drip also made headlines a few months ago when they were both listed in the top 100 brands on the continent.
Cedrick Diphoko, managing director of Bathu, said at the time: “Being listed alongside other incredible brands in Africa means we were able to show that we have made a priceless difference to consumers and communities in Africa and consumers are choosing to walk their journey with us.”
The R45-billion stokvel industry continues to thrive, with more than 51% saying they belong to one or more stokvels.
Tshepo Moloi, the founder and chief executive of StokFella – a stokvel app with more than 25,000 stokvel members – says their findings show that 60% of digital stokvels are located in Gauteng townships, followed by KZN and Western Cape townships at 10% each.
Additionally, 90% of all digital stokvels access their stokvels through their mobile devices, rather than other types of devices.
Digital access is reshaping the traditional stokvel landscape, with notable increases in membership among the 18-24 and 25-34 age groups.
According to this year’s report, two-thirds (63.9%) of individuals in the 25-34 age group are now part of one or more stokvels, making them the most prominent demographic and accounting for the highest growth in stokvel adoption.
Even the more youthful 18-24 age group has seen an increase in stokvel participation, rising to a 44% participation rate in 2023.
Improved internet access benefits individuals and presents numerous opportunities for small businesses to thrive. One sector that has experienced notable growth is food delivery services, driven by the surge in e-commerce and spending patterns established during the pandemic.
While established platforms like Uber Eats and Checkers Sixty60 enjoy strong brand recognition, local services such as Zulzi and YeboFresh have successfully addressed specific needs within the township ecosystem.
Zulzi offers food and pharmaceuticals and even facilitates instant loans, while YeboFresh focuses on bulk orders via WhatsApp for local businesses, leveraging economies of scale.
Jessica Boonstra, founder and chief executive of YeboFresh, says the local narrative and peer-to-peer information are key to tapping into the township economy.
Thabo Maneje, marketing manager for Bathu, says the key is so much deeper than desktop research:
“Sometimes, it’s about hanging out at the car wash over the weekend to hear what people are going through, and be more in tune with the customers,” he says. DM