South Africa’s informal FMCG market continues to demonstrate resilience despite mounting economic pressures, increased regulation and significant changes across the spaza and township retail landscape.
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According to Trade Intelligence, the country’s informal FMCG market grew by 5.9% to an estimated R220bn in 2025, reinforcing the channel’s importance to FMCG manufacturers, distributors and service providers looking for growth beyond formal grocery retail.
The growth comes against a backdrop of moderating inflation, particularly across staples such as rice, sugar and flour, which constrained value growth during 2024 and 2025.
The channel has also faced increased regulatory scrutiny, including compulsory spaza registration introduced in December 2024 and interventions targeting illegal operators and foreign-owned spazas.
Yet the informal channel continues to evolve.
Beyond the spaza shop
For FMCG brands, one of the most significant opportunities lies in understanding that township consumers are not shopping within a single, isolated retail ecosystem.
Trade Intelligence shopper research found that informal-channel shoppers also make use of a range of other township services, including fast-food outlets (69%), hair salons (53%), bakeries and pharmacies.
Spaza shops themselves are also broadening their role. In addition to selling everyday groceries and household products, many are increasingly offering bill payments, fintech solutions and other value-added services.
This transformation is turning informal retailers into community hubs, creating new touchpoints for FMCG brands to engage consumers and build loyalty.
“Shoppers are increasingly prioritising convenience, proximity and value, strengthening the role of informal retailers across township and urban markets,” says Trade Intelligence retail analyst Tshego Modise.
For manufacturers, this means that success in the informal channel increasingly depends on more than distribution. Product availability, affordability, pack sizes, promotions and retailer relationships all need to reflect how consumers actually shop.
A market of multiple consumers
The economic environment is also reshaping shopper behaviour, with demographic changes such as declining household sizes influencing purchasing patterns.
At the same time, the township market cannot be treated as one homogenous consumer segment. Trade Intelligence points to an increasing divide between highly value-conscious shoppers and more aspirational consumers.
“A growing divide between highly value-conscious shoppers and more aspirational consumers means retailers and suppliers increasingly need to cater for different needs, price points and shopping occasions,” says Modise.
For FMCG companies, this creates an opportunity to rethink everything from product architecture and pack formats to pricing and route-to-market strategies.
Cash remains important, but digital is gaining ground
While cash continues to dominate informal retail, digital payments are becoming increasingly relevant.
Almost half of the traders interviewed by Trade Intelligence reported that shoppers now also use debit or credit cards. Rather than signalling the disappearance of cash, the finding points to a hybrid payments environment, with consumers choosing different payment methods depending on the occasion.
For FMCG businesses, the shift could create opportunities for digitally enabled promotions, loyalty initiatives and retailer services that complement rather than attempt to replace existing cash-based behaviour.
Traders are brand influencers
Informal retailers also occupy an influential position in the FMCG value chain.
Trade Intelligence research found that 75% of shoppers surveyed receive product recommendations from spaza owners or managers. This makes traders more than a route to market: they can be important influencers of consumer choice and powerful advocates for brands.
Building stronger relationships with these retailers could therefore be critical for manufacturers seeking to establish new products, encourage trial or strengthen brand preference in township markets.
Innovation is creating the next opportunity
Perhaps the strongest signal from the informal market is its ability to innovate.
A new generation of entrepreneurs is building businesses across retail property, beauty, healthcare, quick-service restaurants and other sectors, responding to changing consumer needs and creating new commercial opportunities.
“The market continues to move forward and so do the opportunities for businesses prepared to move with it,” says Modise.
For FMCG manufacturers, suppliers and service providers, the message is clear: the informal market cannot be approached as simply a smaller version of formal retail.
Its scale, entrepreneurial character and proximity to consumers make it a distinct channel requiring tailored strategies. Businesses that adapt their products, pricing, distribution, services and partnerships to the realities of informal trade could be better positioned to capture growth in a market now worth an estimated R220bn.
As South Africa’s consumers continue to navigate economic pressure, convenience, value and trusted local relationships are likely to remain central to purchasing decisions – keeping informal retail firmly on the FMCG growth agenda.
