Former commercial adviser of the Islamic Republic of Iran in South Africa
South Africa is a large country, with an advanced and dynamic market of about 17 million households and a population of approximately 60 million people, consisting of different races and cultures with different income levels and different consumer needs and expectations, spread across the country’s nine provinces. This country is a member of the 20G group as the top 20 economies in the world and also a member of the BRICS group of emerging economies including Brazil, India, Russia, China and South Africa and as a commercial hub and re-export center and gateway to a large part of the world. It is one of the African markets and has a very competitive economy. South Africa’s economy accounts for 19% of Africa’s total economy, one-third of sub-Saharan Africa’s economy, and nearly two-thirds of the Southern African Development Community’s (SADC) gross domestic product (GDP), placing the country in a position of trade superiority over its neighbors.
The South African retail market is supplied by domestic and imported products and includes a mix of formal and informal retail businesses consisting of sophisticated and modern chains of formal retail stores, such as Woolworths, Checkers, Game and Pick n Pay, which mainly serve High- and middle-income consumers are served, and combination stores such as Macro, to neighborhood convenience stores such as Spar, ShopRite, and informal small and medium-sized retail stores such as Spaza, which sell food and grocery products in urban, suburban areas. And poorer societies sell to low-income consumers. Although the definition of informal retail varies in academic texts and between organizations, it basically includes small, unregistered businesses such as street vendors or home-based businesses established in residential locations, usually without business licenses and operating permits. Also accounting procedures and they do not pay value added tax and are often called spaza or tac stores.
According to the South African Shopping Centers Association, with more than 2,000 shopping centers and about 24 million square meters of formal retail store space, this country is the sixth country in the world in terms of the number of shopping centers and the 20th largest retail market in the world. And it is one of the countries with a very high per capita store space. Also due to the dominance of supermarkets and hypermarkets of large retail chains and the advanced structure of the market, chain stores have an 80% share in the distribution and sales network of this country. Considering the very competitive market of South Africa and considering the shopping culture of the people, various brands of chain stores of all kinds of goods, including consumer goods and durable goods such as food, home appliances, detergents, hygiene products, stationery and clothing they also supply fruits and vegetables.
Chain stores have a network of suppliers, and sales to these stores in South Africa, like most countries in the world, are in the form of trust. In this way, the store settles the account 30 to 45 days after the delivery of the goods. In comparison with the Iranian market, it can be stated that although the type of packaging and after-sales services in South Africa is somewhat different and more developed compared to Iran, there is a great similarity in demand between the two markets in most sectors such as food, clothing, there are shoes, furniture and home appliances and building materials.
Online retail is a new style of retail that is common and growing among both chain stores and traditional stores. While according to the available statistics in 2018, online retail includes about 1.4% of the total sales, but due to the increase in access to the Internet, saving time and costs, and free home delivery, as well as compliance with health protocols in the Corona era, in 2020 the share of online sales doubled to 2.8% and it is expected to increase to 4.2% in 2021.
Considering the uneven distribution of wealth and income as well as the unbalanced distribution of job opportunities, the behavior of consumers, which is mainly a function of their income, is very different. On the one hand, low-quality goods have their own customers, and on the other hand, the high and middle income classes of the society are looking to buy high-quality goods and attach great importance to the brand and after-sales service of durable goods. The high-income classes are mainly whites and blacks, whose purchasing power has recently increased.
As a trade hub and re-export center and gateway to a large part of African markets (including access to 14 SADC member countries with a population of more than 300 million people through land and rail transport), this country has a privileged geographical location. And it is of great strategic importance. Due to having advanced economic and financial sectors and modern logistics infrastructure for effective distribution of goods, 53% of the trade of the Southern African Development Community region in 2019 had its roots in South Africa, which shows the dependence of the countries of the region on the market, ports and roads. The shipping routes are South Africa, and the country’s chain stores have also expanded their distribution network in many African countries using this position.
In general, although retail businesses in Iran are mostly traditional and shopping centers and chain stores are new, but the rapid growth of such businesses and consumers’ acceptance of such stores indicate a change in people’s shopping culture and an increase in the share of such businesses. And the works are in the country’s retail market, and considering the successful experience of other countries in this field and the role of such businesses in the future of the market and various benefits, it seems that efforts should be made by using the successful experience of other countries. In addition to culturalization and localization and introduction and promotion of such businesses, the necessary legal and legal infrastructures should also be provided for the development of such businesses.