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Eric Parker - Franchising Plus

By Eric Parker

The South African market is going through change. The power of the emerging market is becoming evident. Are you fully aware of this market and have you adapted your product and services to take advantage of the market segment?



The Power of the Emerging Market

Why is the emerging market exciting? 

  1. The consumers are not over indebted and have spare expendable income.
  2. Most consumers are paid weekly and will spend their full salary.
  3. They do not have to service heavy debt in the form of house bonds and financing of vehicles.
  4. They do not have their children at private schools.

There are various companies that have taken advantage of this market because they delivered product and services aimed at their needs. Examples include:-

  • Capitec Bank – They have 10 branches in Soweto alone
  • Shoprite
  • Cashbuild
  • Fish and Chip franchises
  • Insurers focusing on life and funeral policies

However, this market is value conscious too so it’s important to look at value added offerings. Transport is also a massive expense item and increasing petrol prices will put pressure on these consumers. It’s also interesting to note how spending and shopping behaviour is changing as more retailers are entering the townships and other non-traditional retail areas. 

Most consumers are looking for convenience due to long hours commuting to work. This is good news for fast food franchises and retailers entering this market. Offering extra value offerings may reduce margins but higher volumes compensate for this. By all indications this emerging middle class market will continue to grow and businesses need to take this into consideration when planning future growth strategies.