Is South Africa ready for 500,000 new spaza shops?
South Africa’s spaza* shop ecosystem is growing by leaps and bounds, which is opening up huge opportunities, despite the sector being largely informal, according to Tobile Zenani and Mlamli Papu from Gugulethu in Cape Town.
Their mission, according to a story on www.fin24.com at the weekend (March 11): disrupting the landscape by building 500,000 multipurpose, tax-compliant and digitally driven spazas over the next five years, which, they hope, will create millions of jobs.
In South Africa’s retail industry, the spaza sector is one of the best performers in terms of growth and these two businessmen see a huge opportunity.
“From June onwards, we will build 1,000 spazas every month,” Zenani told Fin24, adding that the department of trade and industry has provided support for the first 1,000 stores, and the first mSpaza store would open its doors in Khayelitsha on March 7.
What makes mSpaza’s outlets different is that they are able to compete with conventional supermarkets in terms of pricing, convenience and product offering, he says.
“We’ll give every prospective owner the necessary business training and assistance – from how to order stock to keeping the books. We have developed a manual for this. The training will take approximately two months.”
Aside from offering township communities across South Africa access to 21st-century stores that stock cost-competitive products and drive economic growth at township level, Papu and Zenani – who will take a cut of the profits to pay their own bills – hope to create millions of jobs.
A study last year by market research agency Nielsen shows that the proportion of South Africans who shopped at formal trade outlets such as supermarkets and at traditional stores such as spazas grew from 45 per cent to 53 per cent between 2015/16 and 2016/17.
Sales from urban spazas jumped by 13.4 per cent in 2016/17, which is considerably higher than the growth rates recorded at hypermarket and supermarket level (4.8 per cent and 8.6 per cent , respectively) over the same period.
While impressive, the impact of South Africa’s spaza sector could be much more profound.
The fact that most outlets operate informally, contributing little in taxes, is one of the culprits.
Entrepreneurs Zenani and Papu want to change this with their new spaza franchise venture, which intends to build 500,000 tax-compliant, modern and digitally driven spaza stores across the country.
*A spaza shop is an informal convenience shop business in South Africa, usually run from home. They also serve the purpose of supplementing household incomes of the owners, selling everyday small household items.
