The growing Kasi economy - New research shows SA townships have a sustainable holistic ecosystem

Almost half of South Africa's urban population lives in townships, representing hundreds of billions of rands in spending power in the vibrant and growing kasi economy.

Despite this, little data is available to help marketers and brands effectively target this audience.

Produced by digital agency Rogerwilco and market research company Survey54, The 2022 South African Township CX Report represents the saving, spending and shopping behaviour of over 1,400 township residents across South Africa.

Coupled with the inaugural 2021 report, it reveals trends in consumer behaviour to help marketers make more strategic investments moving forward.

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 our 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.

“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 cafeì.”

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.”

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.

The 2022 South African Township CX Report covers, in-depth, the topics of fashion, internet and ecommerce, stokvels, convenience, trust, and payments. Its findings are supplemented with qualitative insights from on-the-ground consumers and additional context provided by a panel of industry experts who add interpretation from their first-hand marketing experience to the incredibly diverse township audience.

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.

BUSINESS REPORT