Stocktake: Choose local and spend locally
BFA Global and JP Morgan collaborate to revive the spaza industry in South Africa and save jobs.Tuesday, 02 Mar 2021
New campaigns and initiatives to attract consumers back to shops, restaurants, taverns and shopping centres abound; but will require more incentives and innovative ideas from marketers and brands to rebuild the economy – such as the unique collaboration between BFA Global and JP Morgan to revive the spaza industry after Covid devastation.
Collaboration to transform spaza shop industry
BFA Global and JP Morgan have embarked on a unique partnership to revive the spaza shop industry in South Africa, thereby saving 10,000 jobs. In a country-first initiative to expand the reach of digital commerce solutions to thousands of spaza shops over the next nine months, it is hoped that two jobs, on average per spaza shop, can be saved through improved financial resilience and support. BFA Global is a research, advisory, data analytics and product innovation firm, and is supported in this initiative by investment bankers, JP Morgan. Experts at BFA Global will support three South African fintech companies with innovation pilots over the next nine months, including A2Pay, Yebo Fresh and Vuleka, focusing on solutions across the value chain. This includes digital ordering; delivery of stock; digital stock management; wholesale linkages; and access to appropriate financial solutions, such as credit to refill stock, that are relevant and affordable for spaza owners.
The programme will assist spaza owners to increase their operational efficiencies, sales and revenue growth due to more efficient digital stock management, increased control over purchases, and reduced costs of transportation and handling cash. Traders will also gain a digital financial identity that will enable access to digital financial services and working capital from other financial service providers or FMCG companies. Currently, only 1% of informal retailers in South Africa accept electronic payments, and 56% do not have access to a bank account. They also find margins squeezed as they lack the relationships with manufacturers and wholesalers that enable many larger shops to enjoy bulk discounts, and are forced to travel to market to purchase stock.
Spaza Shops are crucial to fostering inclusive growth in South Africa’s townships post COVID-19. They add R120 billion to the local economy a year, and contribute 35% of total grocery sales in South Africa (IFC, 2018). The companies supported through this initiative will each receive grant capital, technical support led by fintech experts at BFA Global and connections with partners and corporate innovators who can help them scale their solutions to more spaza shops. JP Morgan has worked with BFA Global as a key supporter for its inclusive tech accelerator, Catalyst Fund, since the fund launched in late 2015. It has since accelerated 43 inclusive fintech startups, six of which are from South Africa.
Diageo campaign to rebuild restaurants, taverns
Diageo South Africa has launched the #WeChoose campaign to help rebuild the hospitality industry, particularly bars and taverns hit hardest by lockdown restrictions. Diageo has assisted more than 400 on-premise establishments, including bars, taverns and restaurants to rebuild their businesses after the COVID-19 lockdowns. A total of R200 million in stock replenishments, cash and marketing support has been given; as well as the beginning of a new movement to promote responsible drinking. The #WeChoose campaign was launched by Diageo in Johannesburg, Durban and Cape Town, 1 March 2021, as South Africa heads to Level 1. “We want to see businesses thrive again and people to be able to come together, but we aim to do this responsibly in terms of both trading safely and consuming responsibly,” said Diageo SA’s marketing director, Zizwe Vundla. “By providing stock injections, formal on-premise outlets can use the revenue generated to help get their establishment back up and running – such as renewing liquor licences and replenishing other stock. Many of these outlets have exhausted their funds during lockdown and are unable to purchase stock to reopen. This is the difference between reopening and not. Diageo’s goal is an alcohol-safe South Africa and not an alcohol-free one.”
Each outlet chosen will receive stock of up to R6,000, depending on their size. In addition, Diageo SA is providing marketing support to help generate publicity for on-premise outlets. “Many consumers might have forgotten their favourite local places during lockdown, so we are helping to remind them, while at the same time encouraging responsible drinking.” Issues such as underage drinking, binge drinking and driving under the influence of alcohol will be tackled as part of the campaign. Lucky Ntimane, convenor: The National Liquor Traders Council added that the lockdown restrictions have been dire for 34,000 taverns which had about 250,000 jobs linked to them. “Liquor traders must take a leading role in promoting the responsible consumption of alcohol.” Watch the video here.
Marketing shortlist for short projects
The pandemic has meant that more marketers are looking for agencies to help with short term communications projects to supplement and give additional support to existing agency relationships, says Johanna McDowell, CEO of the Independent Agency Search and Selection Company (IAS). She explains that COVID-19 has generated many requests from marketers for IAS assistance in finding agencies to help with short term communications projects to supplement and give additional support to existing agency relationships. IAS will pre-qualify shortlisted agencies for the industry. The result is a “shortlist for short projects”, where marketers are introduced to the agencies the IAS has determined are best suited to their immediate requirements. This obviates the need for the long exploration process that usually goes into finding the right fit and presents marketers with a small, pre-qualified choice. Typically, the short-term projects are in the areas of crisis comms, internal comms, social media management, PR and reputation management, digital requirements, and the like. Marketers will be able to select one or more agencies from the shortlist to interact and communicate with directly. The IAS will not manage a pitch process in this instance, but merely supply relevant credentials and contact details.
Malls offer free parking to attract shoppers
Clearly desperate shopping malls will do anything to try bring shoppers back into the malls. Visitors to KwaZulu-Natal’s super-regional mall, Gateway Theatre of Shopping, currently get two hours of free parking. My local small coastal mall hasn’t even bothered to reinstate the token R2 shopping fee for parking in the shade underground. The demand just isn’t there. And while parking charges at the larger regional malls are high, so savings in this regard are a smart strategy, the mall owners have to do a lot more to make people feel safe in malls again. Shopping is a necessary, uncomfortable, and worrying chore right now, not a fun activity. And malls need to make better use of the open air spaces around them or to entertain shoppers with giveaways, prizes or loyalty products, even entertainment, to get them to choose to be there – or while they are forced to be there.
This week in numbers
Retailers were hoping for more from the 2021 Budget Speech, says Steven Heilbron, CEO of the Connect Group. Heilbron says that the decision not to increase VAT or personal income tax is welcomed. It is positive that low to middle income earners will get a small amount of income tax relief from the Budget for 2021/22. Retailers and other SMEs will be relieved that the cash-strapped consumer will not be paying more PAYE. On the downside, the steep increase to the fuel levy and punitively high increases to alcohol duties are negative for retailers. He notes that the liquor supply chain has already had a difficult year following multiple alcohol and tobacco bans at various stages of lockdown. “The 8% increase in alcohol excise duties indicates that government has little sympathy for the plight of the many retail merchants, taverns and restaurants negatively affected by the alcohol bans,” says Heilbron. “The increase in the fuel levy is even worse news.” Another disappointment is that the government has not taken the opportunity to more aggressively bring down corporate income tax to help encourage investment and to nurture entrepreneurship, he says. Although a one percentage point decrease is pencilled-in for next year, South Africa’s corporate income tax rate remains higher compared to most other countries. “The Budget offers few new ideas about how we can reignite economic growth in South Africa,” Heilbron adds. “Given that our country has had one of the worst economic years recorded and with retail sales falling 6.9% overall, we hoped for more imaginative and daring interventions.”
QUOTE of the week:
“The democratisation of the media and the reach that social media provides, has introduced an entirely new factor into the transactional space: the influencer. This means that the personal recommendation, a cornerstone of marketing from its very earliest days, has taken on an altogether new and powerful dimension; it has become a touchpoint,” said Lebo Madiba, managing director of PR Powerhouse, on Retailing Africa this week.
*Stocktake is a weekly roundup of current FMCG retailing and brand news, curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: firstname.lastname@example.org.
Louise Burgers is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.
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