INDEPENDENT RETAILERS

SPAZA SHOP

What is a Spaza Shop?

Historically, South African spaza shops began as shops

Spaza shop owners often start their businesses because they noticed a gap in their community or they have a
passion, such as baking or beer-brewing, that they wish to capitalise on. This kind of business strategy is
referred to as “bootstrapping.” Customers buy from spaza shops because of: their cheap prices; good service;
personality such as friendliness and fairness; it being the only shop in area, having the right stock, good
quality, and that they open early.

We often view the spaza shop as something very South African. A 2017 study by Unisa’s Bureau of Market
Research (BMR) estimated 300,000 jobs are created by the spaza economy and it further contributed R9 billion
to the economy per annum. SA has 2,500 modern trade outlets, including supermarkets, and 140,000
traditional trade outlets, including spaza shops. This contributed to annual retail sales of R316.5bn to March
2017. Traditional trade in urban and rural areas accounted for 22.3% of this, or R70.5bn.

However, the study also noted at least 80% of new businesses fail within their first year of opening. Many small
businesses, like spaza shopsv, fail because they make mistakes that could have been avoided.

What are their realities and what challenges do they face?

Some Spaza shop owners may have insufficient bargaining Spaza shops are currently predominately cash-only businesses,
power or business knowledge to effectively negotiate which mean that they have costly expenses on bank deposits
discounts, which puts them at a disadvantage. There is also and are often left vulnerable to theft due to the large sums they
little existing collaboration or communication between these may be collecting or transporting. Added to this is fact that many
businesses, and they rarely have opportunities to learn from spaza shops owners in SA are women, who are often more
or support each other. vulnerable to crimes and theft.

Spaza shops are high-risk investments, because owners Spaza stores usually buy directly from wholesalers in large
never know if they are going to have a good or bad sales quantities and have to keep track of a number of suppliers.
day. In addition, many of these small business struggle to Stock costs money to buy, transport and store. It can also be
access banks, credit, and business support and training and stolen, damaged or become old. Managing stock sensibly is as
must compete against larger, more established businesses. important as managing cash flow.

A 2017 FinMark Trust study showed there is inadequate Spaza shop owners also need to pay attention to what you
knowledge among small business owners of the benefit of customers want and keep stock of all the popular items. They
credit as a financial tool. Participants in the survey indicated need to think about what their customer may want to buy from
that they do not borrow money because they do not need it their spaza shop that they may not be selling at the moment.
or do not believe in borrowing money. A smaller percentage
of candidates do not borrow funds from the bank because Spaza shop owners often have to rely on word-of-mouth
they are scared or feel that they do not qualify for a loan. advertising as their main way to market their business.
Small business owner should constantly develop strategies and
However, many spaza shop owners, due to the fact that they survival techniques that will keep the business relevant in the
are often known in their community and to their customers, community where it is based.
offer their customers the chance to buy items on credit, but
have inadequate ways to keep track of these transactions.
How does TallOrder meet their needs?

A POS solution that is fast and efficient will help spaza shop Having access to formal credit that will ensure enterprise
staff input information swiftly and accurately. TallOrder’s growth. TallOrder POS will be able to supply spaza shop owners
smart backend functionality promotes upselling of products with financial records that allowed those to get financial support
by guiding and educating spaza shop staff. This results in an for their businesses from banks to buy inventory and ensure that
easy ordering process, which increases customer they are able to rent homes and also rent or buy vehicles, etc.
satisfaction.
Spaza shops can operate more easily with a cashless way of
TallOrder POS software is affordable to setup and the service. TallOrder POS can offer customers the opportunity to
monthly fees are minimal, which is ideal for smaller pay with various cards and devices, making their own shopping
establishments with a varied income. experience quick and easy. With TallOrder POS spaza shops can
limit their cash accepting and thereby making their business
Spaza shop owners can offer credit to regular customers more secure from theft. Their business is therefore also more
when they do not have cash to pay for goods. With TallOrder secure for the people that want to purchase from them.
POS, Spaza shops can easily record sales and showcase
financials when needed for credit and rental opportunities. With TallOrder POS’ V.6.0 debtor capacities spaza shop owners
can follow up with customers as soon as money is due.
It can be noted that Spaza shop owners seem ready to
embrace new technologies to improve their services, i.e the Additional value added services can be added to the TallOrder
widespread adoption of apps such as Spazapp and the I AM Point of Sale Software Solution, therefore offering a multi-
Emerge App. dimensional shopping experience for spaza shop patrons. From
airtime to electricity – these high-value items expand spaza shop
A large amount of Spaza shops sell similar items, but not at business offerings. This can all be done cashless too.
the same price. With TallOrder’s smart back-end solution,
spaza shop owners can customize their item lists according TallOrder’s reporting features will let owners know when stocks
to what they would like to charge in their store, therefore are low and need to be ordered for product replenishment. This
making the item list their own. An additional benefit is that will also show owners what products are doing well and what are
they can add menu items straight to the front-end POS for not as popular, for future ordering purposes.
easy menu changes.

As mentioned above smaller traders are increasingly being recognised for the critical role they play in the overall growth of
the country and many larger companies are moving to empower township and rural traders, and spaza shops. The increase
in financial inclusion in Africa provides the “unbanked” with access to the formal financial system and services, such as
savings, payments, transfers, credit and insurance. Regardless of the platform South African small businesses, such as spaza
shops, use, one thing is clear, they need a stronger Web presence and to be more proactive in harnessing the potential of
technology. It is clear that there are many benefits for spaza shop owners to embrace new technologies, like TallOrder POS.
For example BigSave’s involved with Spaza shops have greatly boosted these businesses. Just by assisting with setting up
Spaza owners properly with shelving and technology these the spaza owners were able to grow their business with 200% in
merely 3 months time. These kinds of technologies ensure that spaza shops function more efficiently and professionally to
ensure that spaza shops are taken seriously within the South African retail industry.

With TallOrder, your Traditional Trade shop (or Spaza)