SPAZA SHOPS IN THE TOWNSHIPS -...
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SPAZA SHOPS IN THE TOWNSHIPS WHAT IS A SPAZA? part 1 : overview This infographic reports on the findings of the Sustainable Livelihood Foundation (SLF) research undertaken as part of the Formalising Informal Micro-Enterprise (FIME) Project. In eight different township covering a population of 325,000 the FIME research identified 1130 spaza shops and interviewing 950 spaza businesses. Spaza shops constitute the second most frequently identified township micro-enterprise. The FIME research found that spaza shops are positioned only in residential areas close to people’s homes. Unlike house shops, which may sell a few items on an ad hoc basis, spaza shops have distinct enterprise characteristics. A spaza shop is an informal convenience shop. The name spaza derives from township slang meaning an ‘imitation’ of a real shop. For decades spaza shops have played an important livelihood role as retailers of household grocery items. They are also important incubators for entrepreneurship, providing the business foundations for generations of South African families whilst also bringing an additional income stream into the household. Only the most essential household grocery items are sold or a converted garage or zozo With limited investment capital the store owner is unable to fully stock the shelves and concentrates on stocking the most popular items. Running a small family spaza shop often means no real profit. All money goes back into buying new stock whilst there is a high risk of the family ‘eating’ from the shop. The FIME research found that South African spaza shops charged marginally higher prices than competing foreign shop keepers. The price difference reflects their higher operational costs as a result of their inability to obtain supplies through network trading operations zozo container house other Stocks a wider variety and size of household items to the benefit of consumers cool drink milk bread cigarettes sugar maze meal eggs rice As a result of the much higher start-up capital for stock procurement and investment approach within the business, the shelves are always stocked to full capacity Able to secure investment from suppliers for fridges / signage Reinvests profit into the business, aims to sell the shop as a going concern Spaza shops sell a range of household grocery items, concentrating on fast moving consumer goods. Some of the smaller shops sell alcohol. The larger shops sell a more diverse range of food items as well as hardware, cleaning materials, soaps, candles and nappies. core products Investment in infrastructure is necessary to grow the business. Important infrastructure includes cold storage (fridges), shelves, burglar bars and security gates to prevent theft and protect staff, signage and branding. core infrastructure fridge signage branding BRANDING Most spaza shops are named, whilst many have a formal branded identity having received brand endorsement from Vodacom, MTN, Coca-Cola, Jive, Unilever, Standard Bank and other large businesses seeking to market products in the township economy. Small spazas often have the image of popular products drawn on exterior walls. cool drink milk bread cigarettes maze meal sugar eggs rice The rationale of the FIME project is to address the pressing need to counter the legal-institutional framework that hinders entrepreneurship and business growth within South Africa’s informal economy. Through new research, SLF seeks to understand the barriers to business growth and employment in the informal economy. Between 2010 and 2013, field research was undertaken in eight sites) Delft South / Eindhoven, ii) Capricorn / Seawinds / Overcome Heights (collectively Vrygrond), iii) Sweet Home Farm and iv) Brown’s Farm and v) Imizamo Yethu in the City of Cape Town, vi) Ivory Park in the City of Johannesburg, vii) Tembisa in the City of Ekurhuleni, and viii) KwaMashu in eThekwini Metro. For information: go to www.livelihoods.org.za/informality/micro-enterprises/ An owner often begins under an apprentices agreement whereby they are rewarded with shares in a business after working for a year or two. Through ethnic business networks, the spaza owners are able to procure goods in bulk and thus obtain price discounts, they reduce transport costs through sharing, secure delivery agreements with suppliers and access high demand products such as cheap cigarettes. Spaza shops that sell cheap cigarettes hold a distinct market advantage. The FIME research found that the larger shops, and especially the foreign run shops, have greater access to contraband tobacco as procurement of supplies require network cooperation and substantial capital. 393 shops sell contraband cigarettes. contraband tobacco The SLF FIME research found that over 51.5% of spaza shops in the survey were run by foreign business persons. The larger shops are positioned to directly compete with South African shops and capture the market. Through lowering prices and providing a better quality service, the foreign run shops have successfully attracted customers away from South African shops and caused a number to cease trading. Some local shop-keepers now rent their spaza to the foreigners for a monthly income. The FIME research found that it was not common for foreign run shops to employ South Africans but rather they chose to engage their own countrymen in the business. The spaza shop will typically be attached to the house Commonly, the business investors either own or have shares in more than one shop. M milk cigarettes eggs C cold drinks bread beer FOR SALE The typical shop keeper is 94% male and 28 years old and been in business for 3 years 23 % SA SPAZAS SELL 51% FOREIGN SPAZAS SELL 37 % ALL SPAZAS SELL Many small spazas sell alcohol. Selling alcohol is regarded as a coping strategy against competition from larger spaza shops especially the foreign run shops that are positioned nearby. 82 SA shops sell liquor 11 Foreign shops sell liquor X10 workers or junior partners on a profit share basis Owner 462 MEN 94.3% TOTAL: 490 TOTAL FOREIGNERS: 541 GRAND TOTAL: 1051 The typical partnership run spaza business commences with a start-up capital of between R20,000 - R60,000 These business are run as to maximize profit, with the business itself regarded as a sustainable asset. The largest spaza business are run by; Somalis, Ethiopians and Bangladeshis, though a few South Africans are also competitive. burglar bars Small family run, spaza business The typical shop keeper is 57.5% male and 42 years old and been in business for 7.1 years Family run spazas usually commence trading with a start-up capital of between R1500-R5000. Often these businesses aim merely to supplement household income. family members. Paid in kind OWNER Husband/Father OWNER Wife/Mother 191 WOMEN 42.5% TOTAL: 449 Large, partnership run, spaza business Owner 28 WOMEN 5.7% BRANDING 258 MEN 57.5% 48.5% SOUTH AFRICANS 510 14.2% ETHIOPIANS 149 4.4% BANGLADESHIS 46 4.6% MOZAMBICANS 48 2.7% ZIMBABWEANS 28 3.2% OTHER 34 22.5% SOMALIS 236
Transcript of SPAZA SHOPS IN THE TOWNSHIPS -...
SPAZA SHOPS IN THE TOWNSHIPSWHAT IS A SPAZA?
part 1: overview
This infographic reports on the findings of the Sustainable Livelihood Foundation (SLF) research undertaken as part of the Formalising Informal Micro-Enterprise (FIME) Project. In eight different township covering a population of 325,000 the FIME research identified 1130 spaza shops and interviewing 950 spaza businesses. Spaza shops constitute the second most frequently identified township micro-enterprise. The FIME research found that spaza shops are positioned only in residential areas close to people’s homes. Unlike house shops, which may sell a few items on an ad hoc basis, spaza shops have distinct enterprise characteristics.
A spaza shop is an informal convenience shop. The name spaza derives from township slang meaning an ‘imitation’ of a real shop. For decades spaza shops have played an important livelihood role as retailers of household grocery items. They are also important incubators for entrepreneurship, providing the business foundations for generations of South African families whilst also bringing an additional income stream into the household.
Only the most essential household grocery items are sold
or a converted garage or zozo
With limited investment capital the store owner is unable to fully stock the shelves and concentrates on stocking the most popular items.
Running a small family spaza shop often means no real profit.
All money goes back into buying new stock whilst there is a high risk of the
family ‘eating’ from the shop.
The FIME research found that South African spaza shops charged marginally higher
prices than competing foreign shop keepers. The price
difference reflects their higher operational costs as a result of
their inability to obtain supplies through network
trading operations
zozo container
house other
Stocks a wider variety and size of household items to the benefit of consumers
cool drink
milk
bread
cigarettes sugar
maze meal eggs
rice
As a result of the much higher
start-up capitalfor stock procurement and investment
approach within the business, the shelves are always stocked to full capacity
Able to secure investment from suppliers for fridges / signage
Reinvests profit into the business, aims to sell the shop as a going concern
Spaza shops sell a range of household grocery items, concentrating on fast moving consumer goods. Some of
the smaller shops sell alcohol. The larger shops sell a more diverse range of food items as well as hardware,
cleaning materials, soaps, candles and nappies.
core products
Investment in infrastructure is necessary to grow the business. Important infrastructure includes cold storage
(fridges), shelves, burglar bars and security gates to prevent theft and protect staff, signage and branding.
core infrastructure
fridge signagebranding
BRANDING
Most spaza shops are named, whilst many have a formal branded identity having received brand endorsement from Vodacom, MTN, Coca-Cola, Jive, Unilever, Standard Bank and other large businesses seeking to market products in the township economy. Small spazas often have the image of popular products drawn on exterior walls.
cool drink milk bread cigarettes
maze meal sugar eggs rice
The rationale of the FIME project is to address the pressing need to counter the legal-institutional framework that hinders entrepreneurship and business growth within South Africa’s informal economy. Through new research, SLF seeks to understand the barriers to business growth and employment in the informal economy. Between 2010 and 2013, field research was undertaken in eight sites) Delft South / Eindhoven, ii) Capricorn / Seawinds / Overcome Heights (collectively Vrygrond), iii) Sweet Home Farm and iv) Brown’s Farm and v) Imizamo Yethu in the City of Cape Town, vi) Ivory Park in the City of Johannesburg, vii) Tembisa in the City of Ekurhuleni, and viii) KwaMashu in eThekwini Metro. For information: go to www.livelihoods.org.za/informality/micro-enterprises/
An owner often begins under an apprentices agreement whereby they are rewarded with shares in a business after working for a year or two.
Through ethnic business networks, the spaza owners are able to procure goods in bulk and thus obtain price discounts, they reduce transport costs through sharing, secure delivery agreements with suppliers and access high demand products such as cheap cigarettes.
Spaza shops that sell cheap cigarettes hold a distinct market advantage. The FIME research found that the larger shops, and especially the foreign run shops, have greater access to contraband tobacco as procurement of supplies require network cooperation and substantial capital.
393 shops sell contraband cigarettes.
contraband tobacco
The SLF FIME research found that over 51.5% of spaza shops in the survey were run by foreign business persons. The larger shops are positioned to directly compete with South African shops and capture the market. Through lowering prices and providing a better quality service, the foreign run shops have successfully attracted customers away from South African shops and caused a number to cease trading. Some local shop-keepers now rent their spaza to the foreigners for a monthly income. The FIME research found that it was not common for foreign run shops to employ South Africans but rather they chose to engage their own countrymen in the business.
The spaza shop will typically
be attached to the house
Commonly, the business investors either own or have shares in more than one shop.
M
milk cigarettes eggs
C
cold drinks bread beer
FORSALE
The typical shop keeper is 94% male and 28 years old and been in
business for 3 years
23 % SA SPAZAS SELL
51% FOREIGN SPAZAS SELL
37 % ALL SPAZAS SELL
Many small spazas sell alcohol. Selling alcohol is regarded as a coping strategy against competition from larger spaza shops especially the foreign run shops that are
positioned nearby.
82 SA shops sell liquor11 Foreign shops sell liquorX10
workers or junior partners on a profit share basisOwner
462MEN
94.3%
TOTAL: 490
TOTAL FOREIGNERS: 541
GRAND TOTAL: 1051
The typical partnership run spaza business commences with a start-up capital of between R20,000 - R60,000These business are run as to maximize profit, with the business
itself regarded as a sustainable asset. The largest spaza business are run by; Somalis, Ethiopians and Bangladeshis,
though a few South Africans are also competitive.
burglar bars
Small family run, spaza business
The typical shop keeper is 57.5% male and 42 years old and been in
business for 7.1 years
Family run spazas usually commence trading with a start-up capital of between R1500-R5000.
Often these businesses aim merely to supplement household income.
family members. Paid in kind
OWNERHusband/Father
OWNERWife/Mother
191WOMEN
42.5%
TOTAL: 449
Large, partnership run, spaza business
Owner
28WOMEN
5.7%
BRANDING
258MEN
57.5%
48.5%
SOUTH AFRICANS
510
14.2%
ETHIOPIANS
149
4.4%
BANGLADESHIS
46
4.6%
MOZAMBICANS
48
2.7%
ZIMBABWEANS
28
3.2%
OTHER
34
22.5%
SOMALIS
236
