These are the latest findings by global measurement company, Nielsen, based on an expansion of its existing, in-depth retail universe. This has resulted in a significantly expanded measurement of the traditional trade channels that is even more demographically and geographically representative of South Africa's consumer spend.
Nielsen South Africa MD, Craig Henry
Nielsen South Africa MD Craig Henry
explains: "The retail environment in developing countries around the world is highly dynamic. It constantly changes in response to evolving macro and micro economic realities, new technologies and changes in the supply and demand of fast-moving goods. The universe is now an excellent reflection of our dynamic marketplace, and provides the most comprehensive coverage of both the modern and traditional trade retail environment in South Africa." A wealth of opportunity
The sizeable growth of the TT sector has taken place against the backdrop of South Africa's population increasing from 38 million in the early 1990s to 54 million by 2014 (Stats SA). Additional factors driving its growth include the rapid progression of the middle class in terms of improvement in their socio-economic standing.
South Africa's marketplace is also more retail dense than ever before, with the number of Modern Trade outlets - Hypers and Supers - having increased from 790 to 2,875 and branded convenience stores having increased to more than 4,500 outlets. TT has, however, more than kept up with its more formal counterparts, with the number of outlets having grown from 31,000 to 134,000 in the last 20 years - a massive 100,000 new outlets. Interestingly, these stores are equally prevalent in both urban and rural areas and there are in fact, now more urban
traditional trade than rural traditional trade outlets in South Africa, at 81,587 and 52,472 respectively.
As a result, the sector has seen continued increase in sales, driven by higher shopping frequency and steadfast shopper loyalty despite modern branded formats opening up in less urbanised areas. This means that whereas Modern Trade stores have seen a 9% annual increase in spend; TT stores have achieved 10% increase showing that they're holding their own in the retail sector. They've also seen a healthier 7% increase in the number of goods sold, compared with the Modern Trade sector that achieved 4%. Independence Day!
One of the key areas of growth within the TT sector, emanates from the positive evolution of spaza shops (counter service TT stores) that have become more organised, increasing the range and variety of brands and categories they offer, while being conveniently located on commuter routes or close to shoppers' place of work or home, and being increasingly competitively priced.
This has seen spazas gaining popularity amongst modern trade shoppers. A massive 48% of shoppers have visited a spaza outlet in the last seven days, versus 38% in 2012, representing a 10% increase in shoppers visiting the channel.
In addition, shoppers visit spazas, on average, more than four times a week (18 times per month) compared to supermarkets which they visit just once a week. This provides four times as many opportunities for brands to connect with consumers and increased opportunities to expose them to new products. Savvy shoppers
What's clear about traditional shoppers is that far from a simple sell, they have strong preferences about when, where and how they like to shop. Key insights to consider include the fact that a TT shopping trip is not always a 'monthly' bulk shopping trip, nor is it always a 'top up' shop - it all depends on the size of the store, the location and the range available.
Operating in Traditional Trade therefore doesn't mean having a one-pack-size product offering that will meet the entire market's needs, it's vital to understand demand in various channels and formats to meet the needs of South Africa's diverse and highly complex TT customer base. ***To download a copy of the full report, please visit Nielsen.com.