Despite significant challenges over the past two years, bringing increased regulation and scrutiny to spazas and informal retailers, such as compulsory registration introduced in December 2024, and the lockdown on illegal immigrants and foreign-owned spazas earlier this year, the informal retail channel continues to offer meaningful growth potential, supported by its resilience and scale.
According to Trade Intelligence, the value of South Africa’s informal FMCG market increased by +5.9% to an estimated R220bn in 2025. While moderating inflation, especially on staples such as rice, sugar and flour, slowed growth for this commodities-driven channel over 2024/2025, the market continues to present opportunities that extend well beyond traditional grocery retail.
Recent Trade Intelligence shopper research found that informal channel shoppers buy from other township services, such as fast-food outlets (69%), hair salons (53%), bakeries, pharmacies and many others.
Spaza shops themselves are also extending their traditional role, increasingly offering services such as bill payments, fintech solutions and other value-added services. These services position informal retailers as broader community service hubs and create additional opportunities for shopper engagement.
Shoppers themselves are also adapting as they navigate tough economic conditions, with demographic shifts, such as declines in household sizes, reshaping demand. “Shoppers are increasingly prioritising convenience, proximity and value, strengthening the role of informal retailers across township and urban markets,” says Trade Intelligence Retail Analyst, Tshego Modise.
At the same time, township markets cannot be viewed as a single homogeneous consumer segment. “A growing divide between highly value-conscious shoppers and more aspirational consumers means retailers and suppliers increasingly need to cater for different needs, price points and shopping occasions,” says Modise.
And while cash remains king, almost half of traders we interviewed reported that shoppers now also use debit or credit cards, highlighting the increasing role of digital payments alongside cash, rather than replacing it.
While shoppers are evolving, the sector’s importance to millions of South Africans remains unchanged. Informal retailers are not simply seen as outlets for products; they also influence purchasing decisions – Trade Intelligence research found that 75% of shoppers surveyed get product recommendations from spaza owners or managers. As such, traders act as both primary customers and powerful brand advocates for FMCG brands.
But perhaps the greatest takeaway from today’s informal retail market is innovation. A new generation of entrepreneurs is building businesses across retail property, beauty, healthcare, quick-service restaurants and more. They are identifying opportunities, responding to changing consumer needs and creating businesses designed for long-term growth. “The market continues to move forward and so do the opportunities for businesses prepared to move with it.” says Modise.
For businesses looking to participate in this market, there is no single formula for success. It is the informal nature of the channel itself that makes it dynamic and agile, creating opportunities for businesses that are willing to adapt, innovate and collaborate. Manufacturers, suppliers and service providers which develop more relevant propositions for the informal trade and build differentiation are those that stand to win.