RETAIL INDUSTRY IN AFRICAN

MARKETPLACE
 Africa’s retail sector remains relatively under-developed at present,
with most shopping being done at traditional shops.
 Although the demographic make-up of the continent is extremely
favourable, success is not guaranteed.
 There are vast differences across countries – North Africa is far more
developed than sub-Saharan Africa (SSA), while the retail market
opportunities in countries will differ due to variances in consumer
tastes, culture, income, and demographics.
 It is important to distinguish between opportunities at the national
and at the city level.
Characteristics of African retail
markets
 90% of transactions occur through informal channels
 Grocery retailing drives the industry
 Forecourt retailing is growing
 International retailers are entering Africa despite the challenges
 South African retailers look to expanding outside the continent
 Internet retailing is growing
KEY DRIVERS

1. Demographic Factors
A large population
Urbanisation rates are rising
Beneficial changes in the age structure
Contd.

2. Macroeconomic analysis
An Economic & Investment Potential Index (EIPI) has been analysed.
The following indicators were included in the index:
 GDP per capita – a proxy for wealth.
 Ease of doing business
 Financial market development – ability to mobilise savings
 Consumer price inflation – measure of macroeconomic stability, and effect on
consumers’ purchasing power.
 Consumer price inflation – measure of macroeconomic stability, and effect on
consumers’ purchasing power
Contd.

 Political risk with a medium- to long-term outlook

 Business costs of crime and violence.
 Main commodity export product as a percentage of the total –
measure of diversity, exposure to shocks, and inequality.

3.Incomes and spending pattern

 Lower income group
 Middle income group
 Upper income group
RETAIL MARKETS IN A SELECTION OF KEY
AFRICAN ECONOMIES
Trends that are expected to boost Africa’s retail sector over the long
term are:
 Robust economic growth relative to the rest of the world;
 Still-low penetration rates of most consumer goods;
 Saturation levels and lack of further growth in mature markets;
 The expansion of modern retail outlets, and the general
improvement in infrastructure; and
 A shift in the preferences of African consumers from informal
shopping outlets to modern formal Western-style retail.
African e-retailers

 Online retail in Africa accounts for only 3-4% of total business-to-

consumer (B2C) e-Commerce sales worldwide
 The internet’s contribution to Africa’s GDP stands somewhere close
to 1%, which is much lower than other emerging markets, but this
could rise to 10% or US$300 billion by 2025.
 An increasing internet penetration rate, the rapid spread and
accessibility of mobile technology and recent improvements to e-
Commerce payments and delivery infrastructure on the continent
are supporting growth in online retail sales.
SWOT ANALYSIS IN AFRICAN RETAIL
STRENGTH
1. Well established supply chain.
2. Substantial strategic investments to 2. Legality of business.
drive growth
3. Preserve brand equity by keeping
brands local.
4. Large number of consumers.
OPPURTUNITY
1. Potential in emerging market.
2. Predictive analytics for
personalisation.
3. Increasing purchasing power of
peoples in countries.
WEAKNESS
1. Political structure.
3. Having different cultures.
THREATS
1. Global and local competitors
2. Technological advancements by
competitors.
3. Cheaper Chinese goods pressurising
margins.