With more than 50% of South Africans living in townships across the country, insight and understanding into Kasi saving, spending and shopping behaviour, and how it changes over time, is vital for the success of brands and the teams who market them.
Rogerwilco, 2021 Financial Mail AdFocus Digital Agency of the Year, launched its inaugural Township Marketing Report in 2021. The second edition of the now-annual study will focus on how, why and where brands should adapt.
In conjunction with Survey54, 1,428 townships residents across South Africa were polled to examine how they support themselves financially, where they spend their money, how this has changed over the past year, what their preferred payment methods are, and what influences shopping behaviour and fashion trends.
“Our first-ever 2021 township survey provided a benchmark of understanding into what drives Kasi saving, spending and shopping behaviour,” says Mongezi Mtati, senior brand strategist at Rogerwilco. “This year’s Township CX Report brings that insight to life by tracking trends and highlighting some significant changes in opinion on certain issues, which is vital for brands and marketers to be aware of.”
The 2022 research dug deeper into some of the commentary from the 2021 research to better understand the township market’s definition of identity and how its various storylines converge into a redefinition of the concept of brand. This year’s findings reveal the opportunity for the rise of organic township brands with insights into and changes relating to, who township residents trust, Kasi cashflow, the power of the stokvel, ecosystems of convenience, and internet usage and its impact on e-commerce.
“We’ve noted increased reliance on entrepreneurship, building brands within townships and Kasi businesses wanting to redefine themselves as contributors in the township economy – all of which are vital to understand for marketing success,” says Mtati.
Key insights of the 2022 report are as follows:
- South African fashion brands are increasingly seen as premium and desirable, with three-quarters of respondents choosing local over international when using their store accounts.
- Township eCommerce is growing exponentially, with 70% of respondents having made online purchases in 2022, compared to 28% in 2021.
- New delivery services are springing up around traditional township food.
- While trust in banks has increased, they are seen as saving rather than investment vehicles.
- Fifty-eight per cent of respondents belong to at least one stokvel; these are diversifying beyond the traditional saving model to offer investment opportunities.
- Cash remains king, with trust in mobile payments and banks from a transactional perspective low. Education around smartphones and mobile payments is essential to growing this market.
- For grocery shopping, convenience is key. Transport costs and proximity to SASSA offices make large supermarkets a strategic monthly venture, while spaza shops are used for daily items. Township loyalty programmes remain an untapped opportunity.
- Word of mouth remains the most trusted recommendation source, while social media, particularly Facebook and WhatsApp, has overtaken TV. Trust in influencers and community leaders has declined substantially.
Significantly, the findings demonstrate the emergence of a holistic, self-sustaining ecosystem in the Kasi economy, with many residents opting for home-grown brands that are trusted by the local community.
Spaza shops, eateries and delivery services are capitalising on this trust, taking advantage of opportunities in communities historically underserved by large brands. For example, 29% of the respondents report having ordered online from small independent food outlets— the majority of which evolved out of the Covid crisis.
“The Kasi economy is alive and visible in townships across the country where entrepreneurship is the lifeblood of these communities,” says Mongezi Mtati, brand strategist at Rogerwilco.
Mtati adds, “This year’s findings show a leaning towards building and leveraging Kasi brands, where township residents are looking more to their own for services and products — from the small fruit, vegetable and snacks stall to the premium cafe´.”
Spaza shop spending is much higher than in 2021, and brands are responding, developing products specifically for distribution in these outlets, which also lowers the barrier to trying new products by selling smaller, single items.
Although monthly grocery shopping is strategically planned in conjunction with SASSA office locations and special offers at larger retailers, there is an overwhelming consensus (90%) that respondents would welcome spaza loyalty programmes. In this light, spaza shops hold a wealth of potential for brands wishing to break into or retain their presence in the township market.
Home-grown fashion is also gaining more attention from local consumers. Clothing forms an integral part of the shopper experience, and 74% of respondents report being more likely to buy local fashion brands with their store accounts if their favoured brands are readily available in the stores where they shop.
“We’re excited that the concept of ‘local is lekker’ is making way for the idea that local is premium,” says Mtati.
“Wearing a home-grown fashion label is now as good as, if not better than being donned in international fashion brands, and local designers are benefitting from the demand for authentic, unique local clothing,” Mtati concludes.
Financial institutions will have to rethink their value proposition for low-income earners to compete with stokvels’ growing popularity and diversification. While banks are still used for traditional savings purposes, there is a clear opportunity for products and campaigns tailored to young professionals living in townships.
One message is clear from the report — brands need to recognise the importance of tailoring their products and messages for the unique ecosystem developing in townships. It is becoming increasingly clear that trust and authenticity have a high premium in this environment.
Thoughtful investments will pay dividends in the long run because, ultimately, despite the disruptions of the Covid-19 pandemic, the Kasi economy is on a trajectory to continue its exponential growth.
Individuals can read the full report here.
