The UCT Unilever report, ‘Connecting with Survivors’, says survivors (defined as people with household incomes of less than R6,000 per month) have over R300 billion in purchasing power, according to the national income dynamics survey. Survivors’ incomes have increased, and in 2015 spending on scholarships increased from R118 billion to R145 billion.
“The Unilever UCT Institute became interested in studying mass market marketing because experience has shown that most marketers have limited information and understanding of this market, which is changing quite rapidly. in several ways. We noted, for example, that routes to this market are changing and that the informal sector is much larger and more robust than previously thought, largely because most data in this part of the market tend not to register the informal end,” says Professor John Simpson of the UCT Unilever Institute.
There is also “hidden” income that is not usually reported from the Survivor’s own businesses, including income from informal loans, income from lobola, sale of produce or sheep and chickens, gifts from the employer, ad hoc employment and rental. Examples of such entrepreneurial businesses include taverns, barbershops, tailoring, construction, personal services, appliance repair, agriculture, arts and crafts, entertainment, education , recycling, health services, telestores and takeaway meals. South Africa is a mixture of developed and developing economies with a strong tendency to function as a developed economy.
The report provides different estimates of the size of the informal economy, StatsSA R120bn, Prof Haroon Bhorat (UCT) R280bn and Loane Sharp (Adcorp) R680bn. To get an accurate idea of the purchasing power of the survivors, the informal and formal totals must be added together.
Informal shops and spazas earn 50 billion rands
“As a brand owner, marketer or media agency professional, you ignore the informal sector at your peril. Ads24’s mass market titles derive income from informal businesses that go unreported.. So what is the actual average monthly income?According to AMPS, the amount spent each year in informal shops and spazas is 50 billion rand”, says Tania Barzu Portfolio Manager: Trade Marketing and Business strategy.
the general public titles of Ads24, Daily sun; Son; Ilanga, and their digital properties, have a national reach of 7.3 million people, which is comparable to the entire population of Hong Kong. Readers of these titles spend R32 billion every month.
Mass market titles and local titles sit at the heart of mass market communities and have a place in the hearts and minds of the individuals within them. Ask Afrika’s Kasi Star Brands survey reveals that 48% of Kasi shoppers use a taxi, 10% have personal or family transportation, proximity and route to market are key elements of successful brand strategies. Access to convenient stores close to consumers’ homes creates a good return on investment (ROI) for the Kasi customer, which equates to value.
Sarina de Beer, MD of Ask Afrika, says, “With the ROI paradigm in the township environment, we also need to look beyond the obvious. Behavior is always tied to a goal, but goes usually paired with some form of expression, something that the community or subculture wants to express about itself and that’s what advertisers need to leverage. I still believe daily sun is a very powerful window into the lives and realities of the people they want to sell to. It was amazing how all the major themes emerging from the data were also topical talking points in the daily sun.”
The mass market is localized
“The most unique differentiator of the mass market compared to the rest of South Africans is that their lives are very localized, especially if they are urbanized. Commuting usually involves getting to and from work,” explains the Professor Simpson.
The cost of transportation is significant for this market, so they will normally do one monthly bulk shopping at a formal retailer and then make their complementary purchases at informal retailers close to home or en route to work.
According to the UCT Unilever Institute, there are 2,500 retail chains in South Africa, 18,500 independent retailers and over 80,000 spazas. There seems to be a shift in sales to the informal market. In addition, there are more than 300,000 peddlers nationwide who provide convenient service, create shopping nodes, and control brand messaging through word of mouth.
The Connecting with Survivors report divides retailers into two segments: formal national chains which consist of supermarkets and wholesalers, and other informal ones which include: independent retailers, “go-getter” retailers (typically foreign family businesses, Chinese, Pakistani or Somali). ) and “survivalist” retailers (usually owned by local individuals in the community).
The route to market for brands is changing and brand owners need to be aware of this or risk losing more and more control over the marketing message and distribution of their products. Another threat is that they are replaced by new brands in this dynamic informal environment. The independent sector is changing and marketers who do not recognize the importance of this economy in the mass market are missing the boat.