We’ve trawled the web to collate some of the best articles and research papers available to those interested in reading and learning more about the dynamic informal retail market and the opportunities it presents to brands, both local and global.  Where relevant, the source and full article can be found by clicking on the article title.  We are in the process of launching our own research platform to offer in-depth insights and data.

5M2T data solution offers a deep-dive into SA's informal trade

5M2T started out as a distribution model that helped commercial brands reach South Africa’s lucrative spaza shop and informal trade sector. After engaging with brands making use of its distribution model, 5M2T identified a need for more focused data and analysis on this sector. This led to the launch of their in-market audit platform that offers brands detailed data on informal trade, claiming to do so “within a fraction of the time and with far greater reach and penetration” than other market research offerings.

Cracking the code to informal distribution

Informal retail channels such as spaza outlets are becoming an increasingly important distribution opportunity for brands, particularly in light of the fact that SA’s informal economy is estimated at 18% of GDP, according to Adcorp economist Loane Sharpe.

It’s a space, however, that has largely been neglected by many brands, where distribution is dominated by large, national retailers.


Spaza Shops

It is useful to understand how spaza shops have developed in South Africa. “‘Spaza’ means ‘hidden’ in Zulu.  The term arose during the apartheid era, when restrictions were placed on black people running businesses” (Bear, 2005). During the apartheid era, many of these shops were established alongside or within people’s homes in order to elude the authorities. Spaza shop owners today set up their shops in their residences out of economic necessity rather than fear of persecution.

Migrant spaza shops: business lessons from Soweto

A survey on the operations of spaza shops in Soweto  revealed  migrants’  eccentric  business strategies and resilience dynamics. Trynos Gumbo and Simamkele Bokolo analyse the results.

South Africa's trade sector thriving with R46billion in annual sales

The perception that South Africa’s Traditional Trade (TT) sector is shrinking in the face of increasing pressure from modern retail outlets could not be further from the truth. Sales through South Africa’s 134,000 Traditional Trade (TT) outlets currently amount to R46-billion per annum, which equates to one of every five rand spent and one third of all consumer goods packages sold in South Africa.

Estimating SA’s informal economy – a hefty contribution

Independent economist John Maynard put his thinking cap on to find an answer, because as Thiele said, government doesn’t have an accurate answer. Punching the numbers using complicated spreadsheets, Maynard reckons the informal economy is around 8% to 12% of the total. Which is in line with other theorists.


South Africa's not so Traditional, Traditional Trade

Many marketers view South Africa’s Traditional Trade (TT) sector as a massive missed opportunity. Their desire to tap into this market is justified given that traditional trade accounts for R46 billion or 33% of all consumer goods package sales in South Africa. With 95% of all retail outlets in the country being TT outlets, the sheer quantity and far reaching presence of this sector, makes it all the more challenging to grapple with in a meaningful manner.


Mind your own business, minister

The research affirmed that foreign-run shops dominated the market. More than 51.5% of spaza shops in the survey were run by foreigners, and these were often linked to partnerships.

Typically, they were owned by Somalis, Ethiopians and Bangladeshis, although it did note that several South Africans were equally competitive.

One key advantage of these larger partnerships is that, by clubbing together, they had more start-up capital (between R20 000 and R60 000), enabling them to stock their shops well. Each store spent, on average, R7 000 a week on stock.


The majority, a ‘mass of opportunity’

South Africa’s largest market is its most misunderstood market. It’s a market that has been largely ignored, one dubbed ‘the same as any other’. But that is untrue. In fact, the market is a “mass of opportunity”.

A growing informal sector: evidence from an enterprise survey in Delft

Using a small-area census approach, this article reports on changes in informal micro-enterprise activity in the Cape township of Delft between 2010 and 2015. The number of micro-enterprises has doubled (from 879 to 1798) in five years, with growth recorded in almost all sectors (notably take-away food and street trade). The increase in the total is contrary to the official national trend. The prevalence of informal enterprises in residential areas, compared to those in the high street, has not changed.

Spaza shops gain ground in SA

The rapid increase in the middle class in South Africa and population growth in the last two decades were among the factors that led to substantial growth of the informal or independent retail trade sector.

The sector boasts R46 billion in annual sales, with more than 9 million households shopping in traditional trade stores, according to a report by consumer behaviour monitor, Nielsen South Africa.

Foreigners own up to three times more spaza shops in townships

Foreigners own up to three times more spaza shops in some townships compared with South Africans, Minister in the Presidency Jeff Radebe said on Tuesday.

He was briefing the ad hoc committee that is investigating violence against foreign nationals on an interministerial committee report on migration.

Traditional trade and the R250bn opportunity

With so many household brands fixated on the holy grail of being listed in the Shoprites, Pick n Pays and Spars of this world, it is worth considering for a moment that R1 of every R5 spent in South Africa happens in the so-called ‘traditional trade’ (‘traditional trade’ or TT is defined as an over-the-counter shopping experience, vs ‘modern trade’ which involves a browsing experience.). That means that 20% of the country’s spend takes place in what many think of as a spaza shop.