The South African retail landscape is highly complex, and brands that understand and cater for all the market segment preferences, are the brands that win Ask Afrika ICON Brand™ status. In 2014 there were 31 brands who managed to gain iconic status demonstrated by hearts and wallets across the South African demographic.

The spaza landscape has transformed over the last five years; spaza shops run by foreigners are out performing those run by locals. In 2013 70% of spazas owned by locals were permanently closed. Many foreign-owned spazas offer interest free credit on essential items. Just over half, 55%, of township residents shop at a spaza. Ask Afrika ICON Brands™ demonstrate relevance across the entire retail spectrum. Research has shown that consumers that shop at a spaza are 10% more likely to buy Coca-Cola, 20% more likely to buy Kiwi shoe polish, and are 20% more likely to buy Pronutro.

A quarter of township residents have no personal income, and the average income for those that do is between R1000 to R6000 per month, they are below LSM 7 (SEL 3-4 in TGI segmentation). Family is very important to people living in townships. Township residents typically purchase from a wide range of stores, and spaza shoppers are more likely than most shoppers to do one bulk monthly shop with top-ups. When doing top-up shopping 48% of township shoppers walk to the shop, and travel an average of 2km.

However, it would be a mistake to homogenise the township shopper as each township has very different consumer dynamics and there are many different demographic groups within each township. Ask Afrika offers research packages that can clearly segment the township market for brand owners.

Brand awareness and the language that brand owners use is often targeted to the formal retail market, which makes up just under 60% of the retail landscape in South Africa. Innovation is needed to reach the informal market, where there is huge scope for growth and development.

Although urbanisation is taking hold, much of the urban growth in Africa is informal and uncontrolled. How many of the products available are properly and intelligently targeted to the rural, township and the local market? Research can provide understanding of market segments and provide brands with the insights so that they get the ‘local speak’ of the community that they are attempting to attract.

“Africa is brimming with potential with its billion people and growing economy, but the lack of supply chain infrastructure remains a massive challenge. Surely brand owners can come up with solutions that will not only sell their brand, but will also meet the needs of the communities,” says Paida Mugudubi, commercial director for Consumer Markets at Ask Afrika.

Innovation in retail is just as important as in branding, and new product layout and retail approaches are on the rise. Informal retail is becoming increasingly popular amongst higher income groups with the pop-up revolution, organic and craft markets, manicures and shoe polishes at airports, and even pop-up pubs, clubs, and restaurants.

Technological advances are increasing consumer shopping options, and retail options now extend online, and to mobile wallets. The diversity of choice creates competition between retailers, and between brands, and each retail space needs to be properly addressed. Consumers are increasingly opting for convenience shopping, and the retailers and brand owners who cater to this need will be the ones who triumph in tough economic times.

“Grocery retailers are still dominant for monthly bulk shopping, but top-up convenience stores, and speciality retail spaces are entering the South African retail space with a bang. Consumers in various demographic categories are demonstrating attitudes that show a new economic sensitivity and awareness. Even those whose financial status was not significantly affected by the global economic downturn, are changing in their spending behaviours and thinking. There has been an improvement in the economy, but consumers remain convinced that economic pressures are getting worse, and to a large extent they are. Brand owners would be wise to keep up to date with consumer trends and cater to the changing retail landscape,” says Sarina de Beer MD at Ask Afrika.