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How to successfully build brands in townships


Jul 31st, 12:32

Reaching the illusive township shopper is high on the agenda of most FMCG companies that want to tap into the buying power of South Africans in some 43 major metro townships.  

FMCG companies need to properly understand shoppers and
the retail environment in townships in order to successfully build their

Reliance on formal retail and formal wholesale to reach
the emerging market, will not necessarily  ensure success.

The majority of the shoppers in these townships are from
lower income households and nearly 90% of consumers in townships have a
household income of under R 5000 a month.

These shoppers are highly reliant on public transport and
the proximity of retail is key, so building a route to market to proximity
informal retail is essential, for example the average distance of a these
households to informal retail in Tembisa is 248 m.

The answer lies in mapping, tiering and targeting the
retail environment which provides FMCG companies with an effective coverage
area and a better return on investment.

It is crucial to map the primary outlets in townships
based on household clustering, thereby prioritising the best outlets based on
estimated shopper spends, as these primary outlets offer the best returns from
local shoppers and in addition can be bulk breakers to service the smaller
surrounding retail outlets.

Successful brands in the emerging market have made route
to market a key component of their brand strategy, companies like Coca Cola,
SAB, Brandhouse, Unilever and P&G.

One of the key success factors is to understand and work
with wholesale and not around it, make wholesalers part of your route to market

The informal township retailer landscape is changing. It
is interesting to note that in some townships up to 80% of spaza shops are
foreign owned.These stores are better run, better stocked, well merchandised,
have credit systems for shoppers and are open 6 am – 9 pm, 7 days a week.

These spaza shops have set-up informal buying groups; they
buy for lower prices and pass on those cheaper prices to their shoppers,
offering better value as well as convenience.

There is an opportunity to convert these retailers to
franchise stores or for brand owners to partner with these outlets, build
relationships, drive activity and shopper programs.

Tips for FMCG brands who want to establish a successful
route to market:

Direct coverage – covering the tiered and mapped primary
outlets directly, whilst partnering with local wholesale as the source of

Cost to Serve – lowest costs by offering a basket of
goods with a third party sales agency that drives lowest possible cost to call.

Build scale–critical mass is crucial.

Discipline - operating in an informal environment
requires a formal disciplined approach from your township marketing company.

Local is absolutely critical – this means using local
wholesalers that know their retailer and local sales people that know their

Availability and visibility – in the township market
shoppers will switch if the product is not available.

Adapt execution - a common strategy is required but
execution is different from one township to the other.

Reaching the emerging market shopper is a huge
opportunity the foundation lies in developing and executing the right route to
market strategy. 



at Aperio FMCG Consulting

Michael Wood is co-founder and Director of Aperio, a business consulting company focused on the FMCG space in South and Sub Saharan Africa. Michael has many years international experience where he held the positions of Marketing Director, Sales Director & Managing Director with the Gillette company and Procter & Gamble....