According to a research conducted years ago by Euromonitor International, the Spaza Industry in South Africa generates over R7 billion in annual revenue and despite these huge numbers, only few Spaza owners can say they’ve made a fortune in this industry.
This is really disturbing and puzzling at the same time but unfortunately, its the reality most owners are facing. They’re living hand-to-mouth in a very lucrative industry and that’s sad to see.
Reasons Why Most Owners Aren’t Profiting Big:
Too Much Competition
Every corner one takes in the townships or even rural villages throughout the country, its guaranteed you’ll see a Spaza shop. This reality makes it difficult for owners to make serious money as consumers have different Spazas to choose from.
Selling Cheap Products
Most of the times, Spazas don’t really sell expensive or techy stuff, its always cheap products like snacks, biscuit, sweets etc and that’s understandable because those products sell fast and are mostly needed.
Unfortunately though, small numbers make small numbers. It would be really difficult or near impossible to make millions selling biscuits or sweets with 20 cents each especially in one area.
Lack Of Franchising
Its now evident that launching 1 Spaza shop is easy but launching 2, 3 or even 15 in different areas across the country, represents the hardest part because only few owners do it.
In order to maximize the profitability of this lucrative Industry, owners should expand or franchise their Spazas to other areas to attract more consumers and thus more money.
Its understandable that when an individual is starting out, the infrastructure won’t be that nice and proper because they usually started out with only a few thousand rands to launch the Spaza.
What’s not understandable though, is the infrastructure being the same as it was 5 years back when the Spaza launched.
People get tired of dirty, unorganized and mediocre infrastructures.
Make no mistakes about it, this is a very lucrative industry but if owners continue treating it without no vision or long term plan of branding & expansion, they’ll continue reaping peanuts.