The challenges for retail in Africa
Oct 19th 2011, 16:33
Africa has become a prime destination for retailers in their quest to break into new markets. Our growing consumer populations combined with slower growth in developed markets, among other factors, all contribute to making it a sought-after business destination. But, as with most ventures, there are challenges to overcome in order to succeed in the untapped markets of Africa.
In order to achieve an adequate market share retailers need to distribute goods and have products available in as many places as possible. But, they face a logistical challenge with distribution because a great number of the consumers they need to service are scattered and live in outlying areas, making them difficult to reach. It is said that “more than 60% of people live in rural areas and have limited access to transport” (Africa’s customers are tough to reach). This combined with their difficultly in accessing transport, means that retailers will have to be more innovative in the way they introduce products to consumers and gain their loyalty.
If retailers want to truly break into African markets, they will need to go into the rural areas to get in touch with consumers directly. They might consider introducing a “mobile shop” at regular intervals, where a truck is driven out to communities with the purpose of selling goods and introducing them to different brands.
The above scenario is completely different when compared to the traditional relationship South African retailers have with their consumers. Here, consumers have to go into a store to make a purchase and having groceries delivered is considered a luxury. It’s likely that retailers will have to develop an entire new marketing strategy to reach African communities because the approaches that worked in developed markets won’t necessarily yield the same results in emerging ones.
Here, advertising is a case in point. Major South African retailers rely on print and television advertising to create brand awareness and get consumers through their doors. Unfortunately most consumers in African communities don’t have access to this media. But, what they do have access to, is mobile phones. Retailers may have to invest more in mobile advertising and related technology to reach these and gain loyalty in these new markets.
South African retailers have wasted no time in heading into Africa in search of their pot of gold. Woolworths has announced its plans to open three stores in Nigeria as soon as December. It also plans to open outlets in Angola, Tanzania and Uganda. Pick n Pay has already opened its first store in Mauritius and there are whispers of it entering Zimbabwe.
The thrills and spills of retail in Africa are yet to begin and we’re excited to learn the outcome. Although retailers have marked out the playing fields, there are no hard and fast rules to winning this game.
List of recent retail store openings in African countries
- Massmart (recent Builders Warehouse opening in Botswana; its first store outside SA)
- Pick n Pay (recent store opening in Mauritius)
- Shoprite (recent store opening in Mauritius)
- The Spar Group already has stores in Botswana, Namibia, Lesotho and Swaziland.
- Woolworths (store openings planned in Nigeria)
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