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150 000 FMCG retail stores MAPPED in SA's metros & urban areas

Updated: May 4



Census of formal & informal FMCG retailers COMPLETED in SA


Many sectors were facing stagnant growth in the formal economy of South Africa, prior to the outbreak of Covid-19, resulting in a cry for information on SMME retailers in townships and especially in the informal sector. How many formal and informal SMME retailers are out there and where are they located? This is a question asked by many of the large manufacturers and distributors in the country. In fact, it is a question being asked by many people in the public sector as well. In 2019, a census of 150 000 FMCG retailers from tabletop sellers to brick and mortar stores was done to fulfill this information need.


Information on where the retail SMMEs are located and what characterizes them was collected by hundreds of enumerators as they went from area to area in the metros and major urban centres. Information on the channel and what specialist products they sell was collected. The contact details of the SMMEs and information on the outlet environment, operating characteristics, financial access and the services available to the stores was collected. Product information collected included home, personal and baby care; groceries; non-alcoholic and alcoholic beverages and several other product categories.


SOUND and CREDIBLE information on FMCG retailers available


The table below shows how many SMME retailers were mapped in the nine provinces of South Africa within the different channels. For example, the channel with the largest number of stores is house shops, Spaza or kiosks with 52 913. Not surprisingly, Gauteng as the province with the largest economy, has the largest number of Spaza shops at 22 802 - two times more than KwaZulu-Natal and three times that of the Western Cape.

The second largest group of SMME's with 24 306 outlets are specialized stores that sell particular categories of consumable goods, such as a bakeries, butcheries, curios shops and hair salons. The next largest group is independent fast food and take away outlets at 21 738 (data on all other fast food & takeaway chains is also available). Information is available for the FMCG sectors that may be impacted the most as we move into Level 4 lock-down including shebeens & taverns (9 364), independent bottle stores (3 630), pubs & bars (2 017) and independent wholesalers (1 897)..... and this only in the metros and urban centres of SA.


According to the Statistics South Africa's 2019 Labour Force Survey Quarter 4, there are 15.5 mil people employed in businesses of which 5.09 mil work in large organizations (50+ staff), 4.7 mil in micro (≤ 4 staff), 3.2 mil in small (5-20 staff) and 2.4 in medium businesses (20-50 staff). This classification of business sizes is not the same as that gazetted by the Department of Small Business Development but is felt to be more reflective of the reality in SA.


A comparison of the above figures to Stats SA's Labour Market Dynamic survey of 2017, show that over the two years there has been an average increase of 3.2% in micro and small business employees while medium and large businesses have shed an equivalent percentage of jobs.


If one equates this to the number of actual businesses, then it is estimated that there are approximately 2.95 mil businesses in the country of which 2.3 mil are micro, 428 000 small, 69 000 are medium and 78 000 are large. The number of SMME would total 2.8 mill in 2019, which is higher than the Bureau of Market Research's (BMR) estimates of 2.2 mil in 2008. What is critical in defining the number of businesses is, how many are in the formal and informal sectors. So the census and mapping of the 150 000 FMCG outlets, provides significant information on an important part of the SMME sector in SA.


Using the FMCG and other datasets, further statistical analysis indicates that in the non-metro and non-urban centres, there is estimated to be another 100 000 possible formal and informal FMCG outlets. This brings the total number of FMCG outlets to 248 000 in the country. These additional FMCG outlets can be found in the smaller rural towns across South Africa. It is proposed that over the next three years that the census be extended to include these FMCG outlets and if required, to extend the census to all SMME's across the country.


The map below shows the level of detail available for Spaza shops in Mamelodi township. A total of 735 Spaza’s shops exist in Mamelodi out of a total of 2 447 SMMEs. Spaza shops are the largest group and make up 27% of the retail outlets in Mamalodi followed by specialized stores (26%) and tabletop hawkers with 16%. This data provides a solid foundation in determining the number of people employed, what are their turnovers over several years and what challenges they need addressing by government.

The SBI study in 2016 of formal SMMEs shows that there are 176 333 micro, 68 494 small and 17 397 medium businesses. A comparison of these figures with those described in the previous paragraphs show what is considered the variance between total SMMEs with those that in the formal sector (over and above definition differences in business sizes). This is a vast difference and talks to the necessity for a census of all SMME's followed by annual updates of at least one third of the country every year.

Covid-19 SUPPORT for SMME's


Since the start of the Covid-19 lock-down the impact on SMME's has been in the forefront of the media and support from government through the Department of Small Business Development and the Small Enterprise Finance Agency (SEFA) as well as private funds from the Motsepe, Oppenheimer and Rupert foundations, as an example.


John Dludlu, CEO of the Small Business Institute (SBI) has indicated that there is a lack of information. The most important information needed is how many SMMEs are out there, where are they located, how many people do they employ, and in what sectors are they situated. Information on longitudinal turnover of revenue and staff as well as the challenges that they face is also crucial.


The census of 150 000 FMCG retail outlets in the metros and urban centres is data that is immediately available and provides much needed information on SMME's. It is a good foundation to providing the most comprehensive and credible data on SMME's in the country. Without this information, effective support to SMME's during Covid-19 and in the future, will be difficult. This is especially considering that SMMEs in the informal sector do not necessarily have access to telecommunications and the Internet to make contact with support programmes of the government and private sector.

Even more difficult, especially after the lock-down, is accomplishing President Ramaphosa's goal of growing the economy through the sustainable development of small (SMME) businesses or reaching the National Development Plan (NDP) targets of SMME's contributing 80% to Gross Domestic Product (GDP) and 90% of approximately 11 mil new jobs by 2030. The mapping of all SMME's is foundational, as is a focus on both the informal and formal sectors.


Enabling SMME's to contribute to the economy


There are many factors that have prevented SMME's contributing to the economy of South Africa. The stagnant economy over the last four years has been a major factor. Key impediments have been red tape and bureaucratic inefficiencies in financial institutions and funding agencies. Many an opportunity for supporting tech start-ups that could have contributed to innovation in the country have failed because agencies mandated by government to do so, have been corrupted. Delayed decisions, highly unethical business practices and delayed payment of SMME's are other factors. All these personally experienced by the author.


The issues raised above are real and will need to be addressed through appropriate policies and strategies. The goal must still be for SMME's, like in other countries, to contribute to the economy and create jobs. Having solid information on the distribution of SMMEs, initially with the census of 150 000 FMCG outlets, is a good start. This will enable the private sector and government to develop targeted strategies to sustain the informal and formal SMME sectors and ideally in coming years, to facilitate their growth and development.


About the Author

Craig Schwabe is a geospatial specialist and focuses on the development of geospatial data for South Africa and Africa. He also specializes in the use of accessibility modelling in the provision of government services and optimizing the location of private sector outlets. Craig has worked with the World Bank on the use of social accountability in society and acted as a technical advisor in the conducting of social surveys across Africa. He has been an adviser to multilateral and multinational organizations in the development and use of geospatial data as well as conducting social surveys. Craig has published several reports, books, chapters and scientific papers as well as presented papers at a number of national and international conferences.


Email: craig.schwabe@africascope-sa.com


Visit Demo Site:

https://mapp.hexagongeospatial.com/app-runtimes/standalone/v1/app/aid--0012000001FOcYUAA1_2c918083671ceb510169c9549af33332/?publicView=MDAxNkEwMDAwMGlhYmxqUUFBXzJjOTE4MDgzNjcxY2ViNTEwMTZiMDM1MTUxNTAyOGNhZDU4YjA5MmU5MmIwNzU2ZTE=


Bibliography


Kriel, G.2020. Analysing the state of SMMEs in a stagnant economy. Finweek. 4 March. https://www.fin24.com/Finweek/Entrepreneurs/analysing-the-state-of-smmes-in-a-stagnant-economy-20200304


Small Business Institute. 2018. ‘New dawn’ for small business in South Africa?https://www.smallbusinessinstitute.co.za/wp-content/uploads/2018/10/SBIbaselineAlert1final.pdf

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