A Trade Intelligence reported that the informal retail market has grown by 6%. Picture: Henk Kruger/Independent Newspapers
The size of the informal FMCG retail market in 2023 was estimated to be R197 billion, according to Trade Intelligence.
The informal sector grew by 6% from 2022, with at least 1.1 million people regularly shopping at around 150,000 stores in the sector.
The South African informal retail sector, which includes spazas, pavement hawkers and modern superettes, are mostly supplied by the formal independent trade (unlisted wholesalers and retailers), corporate chains and directly from suppliers.
However, the formal sector holds a higher value than the informal sector and hold a significant part of the overall grocery market.
The formal sector is valued at R259 billion and make up 33% of the total FMCG market in the country.
Trade Intelligence noted that independent cash-and-carry stores and wholesalers have long recognised the value of informal and independent trade. These businesses have been serving customers since before the end of Apartheid and remain a primary channel for informal traders.
Of the traders that were reviewed, 95% of them reported that they buy their stock from wholesalers.
Trade Intelligence has also reported that supermarkets have started to recognise the informal trade as an important route.
According to the report, as early as 2016 Pick n Pay had ‘Traders welcome’ signs to offer bulk deals to informal retailers.
Now, customers shopping in bulk at Shoprite Cash and Carry stores can now enjoy a new service: they can purchase a wide range of goods and have them delivered within a 50 km radius.
According to Trade Intelligence, suppliers like Unilever, SAB and Coca-Cola have acknowledged the importance of the informal and independent trade to their businesses.
They also offer initiatives to the informal sector like point-of-sale giveaways, store upgrades and business training.
Last year, Tiger Brands announced a route-to-market strategy to increase the presence of products in the general trade including informal and independent township stores.
Trade Intelligence said that some argue that corporates are a threat to the country’s informal sector while others believe that big retailers help informal traders by offering them a convenient location to source goods.
Pick n Pay Boxer which started out in 1977 was initially a conventional wholesaler but by the end of February 2024, 477 various locations including townships.
Shoprite’s Usave brand has 42 Usave eKasi container stores which are modelled on the spaza format.
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