While Shoprite, Pick & Pay, Spar and other formal retailers slug it out against each other for the purse of the consumer an invisible giant is awakening in the informal sector which is winning the purse and growing faster than the formal sector. This giant is not a single entity but a multitude of small informal shops who form an invisible matrix in the informal economy. Witness the rise of “spazarettes”. A spaza is a hole in the wall offering small run out and top up products whereas the spazarette is more a superette albeit an informal one. And this sector of 100 000 plus stores are part of a Kasinomic Revolution which is revolutionising and disrupting the formal retail sector.
This should be good news as jobs and business filters down to the kasi (township) economy and makes our economy more inclusive. We should be all ululating in the streets and the minister of small business among others should be cutting ribbons and showcasing this entrepreneurial revolution. Well the problem is that this entrepreneurial retail revolution is built by traders who come from Somalia, Ethiopia, Pakistan and Bangladesh, foreigners, stealing our jobs, immigrants, illegal!
It is not the immigrants however who have destroyed the SA owned and run spaza sector, it died long before they arrived unable to withstand the onslaught of formal retailers led by Shoprite who entered the townships around 8- 10 years ago, initially with a tentative few shops then a wave of formal supermarkets.
Up until this time South African owned spazas dominated the informal sector, but they were always a grudge purchase, as they were expensive, had little choice in brands or pack sizes, but were close, in your street and open long hours. When the formal retailers entered the township the spaza could not compete. Brand owners nationally predicted the demise of the wholesale and spaza sector and began to focus more and more on formal retailers. A whole generation of small kasi businesses died off under the formal retailer onslaught. Those spazas that survived were essentially low turnover low margin outlets surviving as emergency stores.
So the immigrants, led by Somalis fleeing the hell of Black Hawk Down, entered the gap left by the dying South African run spaza. The immigrant spaza invasion has not just been a one-way street with immigrants getting jobs and business from South Africans and little or nothing in return. This simplistic and often xenophobic storyline ignores the huge benefits that low-income communities have received through the transformation of the spaza sector and the disruption of formal retail.
Estimates are that South African home owners earn more than R 30 billion a year in rental from the approximately 100 000 immigrant spaza stores nationally. We need to appreciate this massive contribution to the economy and to households who would otherwise have lost their incomes from their little spazas.
Join me at Township Marketing Summit, 17 & 18 Mar, click to register: https://www.marketingmixconferences.co.za/shop/12th-township-marketing-summit-20201718mar20/
Shelf surveys showed that these spazarettes are on average on par with formal wholesalers or 5 % cheaper than formal retailers on a basket of the same branded groceries. Add the cost of transport to a formal retailer and that cost saving could be higher. Add the inconvenience of public transport or carrying your heavy goods like bags of rice, maize meal, canned goods, litres of cooking oil and suddenly the massive attraction and competitive advantage of the spazarette becomes irresistible.
The formal sector is not sleeping this out, Shoprite has launched Usave eKasi container shops emulating the spazas, plus Shoprite Cash & Carry a hybrid wholesaler store pilot to benefit from wholesale to the self same spazarettes who compete with them. PicknPay now offer combos of staples and other innovations, formal wholesalers are buying shares in spazarettes. The revolution is in full swing and the kasi shopper is at the centre of this revolutions at once driving it and also riding the wave.
Township shoppers now benefit on a number of levels, the shopper can now get cheaper, or priced on par, branded products right down the road from their home. Shoppers are saving on transport, which can be a large part of shoppers’ budgets, plus the spazarette will arrange an assistant with a wheelbarrow or cart to help transport home larger staple items.
Spazarettes give interest free credit at critical times of the month when consumers have no money and would otherwise resort to loan sharks to afford food. On another level, formal retailers are forced to compete with the increased competition from the spazarette sector, ensuring better deals to shoppers, which would not happen in a dominant formal retail environment.
The Kasinomic Shopper Revolution is here, aluta continua …
look forward to seeing you at Township Marketing Summit, Jhb, 17 & 18 Mar, click to view full program: https://comms1.everlytic.net/public/landing-pages/TownshipMarketingSummit-yjZu2sKkfdle67Qp