Township consumers prioritise value, says new report

As South African residents adapt to a number of challenges, including high unemployment, power cuts, poor service delivery and rising food prices, a recently released report reveals that township consumers are prioritising value over brand loyalty, with nearly 60% saying that price is their primary consideration when choosing a product.

Just less than 25% of respondents emphasised the importance of a brand’s understanding of their needs, while only 10.4% mentioned advertising as a motivating factor.

Rogerwilco’s “Township Customer Experience Report” for 2023 polled more than 1,000 people living in townships nationwide to better understand their spending and saving habits and the brands that resonate with them. The report, which was developed in conjunction with market research company Survey54, found that a strong sense of loyalty exists towards local shops and brands, evidenced by 23% of respondents spending 25%-50% of their income within the township.

As transport costs escalate, township consumers are shopping more at spaza shops, with the research revealing that these shops are witnessing a year-on-year increase in the number of daily shoppers.

"Spaza shops are responding by adopting strategies which cater for customers’ budgets and their current need for value by, for example, repackaging products into smaller sizes and offering weigh-and-pay options,” says Mongezi Mtati, senior brand strategist at Rogerwilco.

These strategies are paying off, with 25% of respondents saying  they are spending over 50% of their income within the township. More than half of respondents (51%) say they are shopping at spaza shops daily, an increase from 44% in 2022.

Mtati says brands should consider collaborating with spaza shops,  as close partnerships with these businesses will allow brands to increase their basket sizes as customers top up their supplies throughout the month.

Home-grown brands have become more popular with township consumers. In 2022, 75% of respondents said they were more likely to buy local fashion brands if they were easily accessible through store cards. This year’s survey delved into the actual expenditure on local fashion. Nearly 17% of respondents reported spending R1,000-R2,000 in the past year, with almost 6% investing over R3,000 in local fashion brands such as footwear brand Bathu (7%), Drip (4.4%) and Amakipkip (purchased by just over 1% of respondents). In comparison, 6.3% of respondents bought international fashion brands.

The loyalty towards local businesses extends to the fashion industry. The popularity of homegrown brands is on the rise among township consumers.

The internet is crucial in transforming life in South African townships, providing opportunities for education, access to information and income generation. Last year's study showed that 70% of respondents had purchased online. This year respondents were asked about using the internet to earn money, and 60% reported that either they or someone they knew had engaged in the online sale of products or services, or had worked online.

The availability of affordable and high-speed internet has significantly affected internet penetration in South Africa; it now stands at 72.3%. Improved internet access provides small businesses with opportunities to thrive.

The surge in e-commerce has benefited food delivery services. Though established platforms like Uber Eats and Checkers Sixty60 enjoy strong brand recognition, local services such as Zulzi and Yebo Fresh have addressed specific needs within the township ecosystem. The former offers a range of products, including food, pharmaceuticals and instant loans, while the latter delivers bulk orders via WhatsApp for local businesses, leveraging economies of scale.

The report found that digital access is reshaping the traditional stokvel landscape, with significant increases in membership among the 18-24 and 25-34 age groups. Two-thirds of individuals in the 25-34 age group are now part of one stokvel or more, making this the most prominent demographic. They  account for the highest growth in stokvel adoption. The 18-24 age group has shown an increase in stokvel participation, rising from 37% in the previous year to 44% in 2023.

Township residents are prioritising value over brand loyalty and are increasingly supporting local businesses, which means that brands need to engage and establish a presence actively in these communities.