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 Like many proprietors of "spaza" shops — the informal stores that
dot township corners — Grace barely manages to keep afloat as more
of her neighbors 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 name.
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 wealth.
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 centers that have sprung up in recent years.
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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 center, 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 literacy, nothing."
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 shelf.
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)
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