The 2022 South African Township CX Report covers in-depth topics from a wide variety.

Its findings are supplemented with qualitative insights from on-the-ground consumers and additional context provided by a panel of industry experts who add interpretation from their first-hand marketing experience to the diverse township audience.

Almost half of South Africa's urban population lives in townships, representing hundreds of billions of rands in spending power in the Kasi economy. Despite this, little data is available to help marketers and brands effectively target this audience.

Key insights of the 2022 report are as follows:
  • South African fashion brands are increasingly seen as premium and desirable, with three-quarters of respondents choosing local over international when using their store accounts.
  • Township eCommerce is growing exponentially, with 70% of respondents having made online purchases in 2022, compared to 28% in 2021.
  • New delivery services are springing up around traditional township food.
  • While trust in banks has increased, they are seen as saving rather than investment vehicles.
  • Fifty-eight per cent of respondents belong to at least one stokvel; these are diversifying beyond the traditional saving model to offer investment opportunities.
  • Cash remains king, with trust in mobile payments and banks from a transactional perspective low. Education around smartphones and mobile payments is essential to growing this market.
  • For grocery shopping, convenience is key. Transport costs and proximity to SASSA offices make large supermarkets a strategic monthly venture, while spaza shops are used for daily items. Township loyalty programmes remain an untapped opportunity.
  • Word of mouth remains the most trusted recommendation source, while social media, particularly Facebook and WhatsApp, has overtaken TV. Trust in influencers and community leaders has declined substantially.
Significantly, the findings demonstrate the emergence of a holistic, self-sustaining ecosystem in the Kasi economy, with many residents opting for home-grown brands that are trusted by the local community.

Spaza shops, eateries and delivery services are capitalising on this trust, taking advantage of opportunities in communities historically underserved by large brands. For example, 29% of the respondents report having ordered online from small independent food outlets— the majority of which evolved out of the Covid crisis.

"The Kasi economy is alive and visible in townships across the country where entrepreneurship is the lifeblood of these communities," says Mongezi Mtati, brand strategist at Rogerwilco.

Mtati ADDS, "This year's findings show a leaning towards building and leveraging Kasi brands, where township residents are looking more to their own for services and products — from the small fruit, vegetable and snacks stall to the premium cafe´."

Spaza shop spending is much higher than in 2021, and brands are responding, developing products specifically for distribution in these outlets, which also lowers the barrier to trying new products by selling smaller, single items.

Although monthly grocery shopping is strategically planned in conjunction with SASSA office locations and special offers at larger retailers, there is an overwhelming consensus (90%) that respondents would welcome spaza loyalty programmes. In this light, spaza shops hold a wealth of potential for brands wishing to break into or retain their presence in the township market.

Home-grown fashion is also gaining more attention from local consumers. Clothing forms an integral part of the shopper experience, and 74% of respondents report being more likely to buy local fashion brands with their store accounts if their favoured brands are readily available in the stores where they shop.

"We're excited that the concept of 'local is lekker' is making way for the idea that local is premium," says Mtati.

"Wearing a home-grown fashion label is now as good as, if not better than being donned in international fashion brands, and local designers are benefitting from the demand for authentic, unique local clothing," Mtati concludes.

Financial institutions will have to rethink their value proposition for low-income earners to compete with stokvels' growing popularity and diversification. While banks are still used for traditional savings purposes, there is a clear opportunity for products and campaigns tailored to young professionals living in townships.

One message is clear from the report — brands need to recognise the importance of tailoring their products and messages for the unique ecosystem developing in townships. It is becoming increasingly clear that trust and authenticity have a high premium in this environment.

Thoughtful investments will pay dividends in the long run because, ultimately, despite the disruptions of the Covid-19 pandemic, the Kasi economy is on a trajectory to continue its exponential growth.

Individuals can read the full report here.   

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