Retail Industry (Spaza Shops)

The key emerging economy has always been entrenched by Spaza shops. South African retailers have realized the significance of retail in South African townships with Shoprite and Spar displacing our beloved Godide Supermarket, Khabazela Supermarket, and the persistent rash of Cambridge supermarket around the taxi ranks. It is estimated that the spaza shop market in South Africa is valued at around R40 billion per year and that 90 percent or more of the transactions are in cash. South Africa’s informal market is characterized by unbanked spaza owners with limited or no access to better financial products. The retail business is famously difficult and cutthroat, more especially where perishables such as food are concerned. Profit margins are tiny, opening hours are brutally long, and fickle customers usually have a choice of where to shop and when. The question of major chains moving into former townships is a difficult one. On one hand, the chain brings benefits to consumers such as convenience, a pleasant and safe shopping experience, and good products at excellent prices. That’s not to mention the jobs and general upliftment of the neighborhood. On the other hand, the owner of a tiny shop who has been serving the community through thick and thin can suddenly be forced out of business including the foreign-owned spaza shops. South Africa’s informal market is characterized by unbanked spaza owners with limited or no access to better financial products. This makes it difficult for them to deal with FMCG companies who generally do not open lines of credit with smaller retailers that order in small quantities. It was this mismatch that allowed a local fintech, Invoiceworx (now Zande Africa) to offer an innovative financial and distribution platform that provides trade and merchant finance to spaza shops. South African spaza shop owners don’t succeed is a lack of finance and broken supply chains. The business provides cash and credit service offerings to all spaza shop owners and therefore, Zande transacts with any spaza shop that wants better pricing and better service. 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 capitalize on. This kind of business strategy is referred to as “bootstrapping.” Customers buy from spaza shops because of: their cheap prices; good service; personalities such as friendliness and fairness; it is the only shop in the area, having the right stock, good quality, and that they open early. Spaza shops are often high-risk investments because owners never know if they are going to have a good or bad sales day. In addition, many of these small businesses struggle to access banks, credit, and business support and training and must compete against larger, more established businesses. Spaza stores usually buy directly from wholesalers in large quantities and have to keep track of several suppliers. Stock costs money to buy, transport, and store. It can also be stolen, damaged, or become old. Managing stock sensibly is as important as managing cash flow. A large amount of Spaza shops sell similar items, but not at the same price. With TallOrder’s smart back-end solution, spaza shop owners can customize their item lists according to what they would like to charge in their store, therefore making the item list their own. Spaza shop owners can offer credit to regular customers when they do not have the cash to pay for goods. With TallOrder POS, Spaza shops can easily record sales and showcase financials when needed for credit and rental opportunities. [How the Spaza shops can create a value-adding chain that is well-known for township retail brands, and guts and tenacity to start your own business?]. How to improve supply chain operations processes for excellence and develop a business model?

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Using the above giving information as background the following needs to be answered:

– Give a detailed account of the SCOM decision processes for the spaza shop retail industry.

– Provide a conceptual (a diagram) and theoretical framework [Accurate presentation of evidence].


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