(Repeats story first published April 20, text unchanged)
* Large retailers increasingly target black townships
* Spaza shops a tradition of township life
* Owners need to buy in bulk, improve business skills
By David Dolan
SOWETO, South Africa, April 20 In this corner of
South Africa's black township of Soweto, the biggest building
used to be the Catholic church. Now it's been overshadowed by a
shopping centre and business has only gotten worse for Grace, a
Like many proprietors of "spaza" shops - the informal stores
that dot township corners - Grace barely manages to keep afloat
as more of her neighbours head to the mall.
"Once people get paid, they buy their groceries at the
malls," she said, sitting among dusty shelves of tea-bags, small
packets of biscuits, loose cigarettes and butter.
"They used to buy their groceries from us. Now they only
come for daily items," she said, declining to give her last
Grace has been running the shop with her husband since 1993,
the year before South Africa's first all-race elections. They
used to earn around 1,500 rand ($140) a day, but are down to a
third of that now.
During apartheid, blacks were crammed together in squalid
townships miles away from cities. Some residents began to sell
staples such as maize meal and cooking oil out of their own
homes. The informal stores became known as tuck shops or
"spazas," a slang word that connotes "just getting by".
Along with shebeens, or corner taverns, spazas are one of
the most visible parts of township life, and a major component
of South Africa's vast informal economy.
While recent data on the informal economy is hard to come
by, a 2002 study by the University of South Africa's Bureau of
Market Research (BMR) estimated that spaza shops brought in
around $705 million a year, employing up to 290,000 people.
Those numbers will have come under pressure over the last
decade as real estate developers and big grocers such as
Shoprite and Pick N Pay push into black areas,
targeting rising consumer spending.
GETTING THE CAKE
South Africa's emerging black middle class grew at annual
6.5 percent between 2001 and 2007, according to the BMR, which
estimated the growing socio-economic group at 9.3 million in
2007, out of a total population of around 50 million.
"The emerging consumer market has been very, very good for
construction of retail outlets in non-traditional locations,"
said Mike Upton, chief executive of South African building
company Group Five.
"It's kind of like first mover gets the cake."
Grocers have been big beneficiaries of this broadening
Shares of Shoprite, Africa's top retailer, have more than
trebled over the last five years, lifted by a push into
sub-Saharan Africa and previously underserved South African
markets. The Cape Town-based company's no-frills Usave discount
outlets pose a major threat to spaza shops.
The warehouse-like stores appear tailor-made for low-income
customers: most of the laundry soap is for hand washing, not
machines. Some dispense with large parking areas as customers
come on foot.
The only milk available is full cream - no skim, organic or
soy - while bags of frozen "walkie talkies" - chicken heads and
feet - are plentiful and cost just 10 rand.
In Soweto, a flashpoint of the anti-apartheid struggle,
where stone-throwing black youths battled heavily armed soldiers
and police with their snarling dogs, the 65,000-sq-meter Maponya
Mall is one of several shopping centres that have sprung up in
Just down the road from Regina Mundi church where former
President Nelson Mandela is depicted in stained glass, the mall
boasts a Pick N Pay hyper-market, more than a dozen restaurants
and a Virgin Active gym.
Although still poor, Soweto is unmistakably on the rise,
evidenced by the growing number of tidy brick bungalows and
shiny Toyotas, and even the odd BMW.
While recent data is not available, Rose Nkosi, the head of
the South African Spaza and Tuckshop Association, reckons that
the sprawling black township alone may have lost around 30
percent of its spaza shops since 2005.
That's bad news for the elderly or those who live far from a
shopping centre, Nkosi said.
"Spazas are community shops," she said, pointing out they
sell in small amounts, such as half loaves of bread, to meet the
needs of the poorest customers.
ECONOMIES OF SCALE
The big retailers are able to use economies of scale to
undercut spazas, which usually buy in small volumes and from
wholesalers, driving up costs.
Nkosi has teamed up Songi Pama, an entrepreneur and
consultant, to bring spaza shop owners together to buy direct
from suppliers such as South Africa's Tiger Brands and
the local units of Unilever and Nestle.
The survival of spazas is critical to the fabric of the
townships because so many of the owners are women, Pama said.
"The little that they get out of these outlets they use to
feed their children and take their children to school."
Too few owners are real businesspeople, said Noel Ndhlovu,
who publishes industry newsletter Spaza News. Most are just
looking to make enough get by, he said.
"Unfortunately, the bulk of spaza shops, about 60 or 70
percent, are survivalists. And because they are survivalists,
they don't have skills - no business skills, no financial
In one workshop he ran, Ndhlovu said it took him several
sessions to get some of the owners to understand how to work out
their gross and net profit.
Not far from Grace, middle-aged Vincent Jonyane leans out
the window of his tin-roof shop and laughs. Business is good, he
says. While elderly rivals are stuck in the past, he is thinking
of expanding his wooden shack.
"I'm still young, I know where to buy things cheap," Jonyane
said, pointing to stacks of eggs in cardboard cartons on a
Even the malls don't worry him.
"You can't buy one egg at the mall. I sell one egg."
(Additional reporting by Tiisetso Motsoeneng; Editing by Pascal
Fletcher and Sonya Hepinstall)