SA’s spaza shops thrive despite bullish mainstream retail evolution

SA’s independent grocery trade - spaza shops in particular - continues to thrive despite shifts in the mainstream retail sector over the past two decades.

The most recent research from Trade Intelligence has found informal retail outlets have not only withstood the expansion of major supermarket chains but have also evolved to become integral to the country’s township economy.

Trade Intelligence estimates that the informal fast moving consumer goods (FMCG) retail market, which includes spaza shops, was valued at R197bn in 2023 — a 6.9% increase on the previous year.

This sector serves more than 11.1-million people through its network of about 150,000 stores. Trade Intelligence said these stores are primarily supplied by formal independent trade such as unlisted retailers and wholesalers, valued at R259bn and account for 33% of the total FMCG market.

That market share highlights the critical role of independent trade in the overall grocery market, making it a key focus for FMCG manufacturers and suppliers, Trade Intelligence said.

“However, this is a complex and changing market to do business in due to blurred routes to market and continuous shifts, some of which are outlined below,” it added.

One of the drivers of change in the informal retail sector has been technology. Digital adoption is increasingly permeating all areas of informal trade, from stock sourcing to marketing, e-commerce, and payment systems.

Trade Intelligence said younger consumers are leading the charge in township e-commerce, with 26% of spaza shoppers now ordering goods via online platforms such as WhatsApp and Uber Eats.

“Then there is the proliferation of fintech companies offering cheaper merchant services with often free point-of-sale devices. This has coincided with growing demand for digital payment methods in the more formalised portions of the township economy including larger cash and carries, independent wholesalers and superettes,” the research company said.

Independent cash-and-carry stores and wholesalers have long recognised the potential of informal trade, with these businesses having served informal traders for decades and remain the main channel for spaza shop owners to source products.

“Today, they remain the main channel to the informal trader, with 95% of the 118 traders interviewed in June reporting that they buy their stock from wholesalers,” Trade Intelligence said.

“Suppliers like Unilever, SAB, and Coca-Cola have long recognised the importance of the informal and independent trade to their businesses, with various initiatives from point-of sale giveaways to store upgrades, to business training.”

In recent years, even corporate supermarket chains have started recognising informal trade as a vital route to market.

Supermarkets such as Shoprite Cash & Carry now offer bulk-buying customers an automated online shopping system with free delivery within a 50km radius, effectively bringing e-commerce to spaza shops.

Simultaneously, these chains are also competing with independent trade by rolling out brands and formats more geared towards township retail, Trade Intelligence said.

Spar, for example, outsources some township deliveries for its Spar2U delivery service to local businesses such as Delivery KA Speed SA and KasiD.

“The importance of the independent trade in SA remains undeniable. For millions of South Africans, spazas and informal retailers are not just convenient — they are essential.”

While spaza shops are often celebrated as symbols of black resilience and entrepreneurship, they are also a product of economic marginalisation and represent a creative response to systemic exclusion from mainstream economic opportunities.

Despite this, the township economy, valued at about R100bn annually, makes a significant contribution to the national GDP.

To help brands and service providers navigate this dynamic sector, Trade Intelligence has introduced its Kasi Kit solution — a toolkit that includes research, workshops, and facilitated trade visits.

The initiative aims to bridge the gap between boardroom strategies and the realities of township retail, providing FMCG suppliers with the insights and tools needed to succeed in this complex market.

“Both the formal independent wholesale and the informal sectors remain tremendously important channels for consumer goods brands to reach the township shopper,” says Kerry Elliot, sales lead at Trade Intelligence.

goban@businesslive.co.za