Trends Shaping the Retail and Consumer Sector in Sub-Saharan Africa

Recent years have seen surging investor interest in sub-Saharan Africa’s retail & consumer sector. Whereas the focus was traditionally on extractive industries such as oil and mining, a growing consumer class demanding everything from mobile phones to fast food have prompted many retailers and consumer goods companies to look with fresh eyes at opportunities in the region. Based on a publication by PWC, which can be found here http://pwc.to/3uyblL2, this blog will consider 10 countries, Angola, Cameroon, Ethiopia, Ghana, Ivory Coast, Kenya, Nigeria, South Africa, Tanzania and Zambia and look at the trends shaping the retail and consumer sector within them. The study highlighted 11 trends, which are summarized below.

  1. Demographic Changes

Africa’s young population is expected to drive consumption and economic growth in the coming decades. According to the World Bank, Africa’s median age was 19.7 years in 2012, and it is expected to increase to 25.4 years in 2050, making Africa the continent with the youngest population.

  1. Urbanization

More than half of the world’s population now lives in towns and cities, and by 2030 this number will swell to about 5 billion. Much of this urbanisation will unfold in Africa, bringing huge social, economic and environmental transformations.

  1. Income Growth

While the proportion of those living in poverty has fallen from around 55% in 2002 to 48% in 2010, the total number of poor people has increased due to population growth. About 413 million people in sub-Saharan Africa are estimated to live on less than US$1.25 per day

  1. Busier, healthier and more informed consumers

Across the countries covered in this report, business leaders point to evolving consumer lifestyles and ambitions that are influencing purchasing behaviour. Due to growth in internet penetration and travel, Africans are more connected to global trends than ever.

This increasing level of discernment is also being seen in the quality of goods that consumers expect and their willingness to pay for it. Time-constrained, urbanised consumers are also seeking greater convenience. Those who can afford it are also more health-conscious. Hence, in countries where regulation around product labelling is weak, we anticipate calls for greater transparency about the contents of processed foods in the coming years.

  1. Home grown champions making their mark

Across the continent there are numerous examples of indigenous companies holding their own, and even winning, against foreign competitors due to nimbler business structures and a better understanding of consumer and on-the-ground market realities.

  1. Modernization

The industry is, however, slowly modernising and the past decade has seen the development of numerous western-style shopping centres. In countries such as Ghana, Nigeria and Zambia, many of the malls are anchored by South African retailers.

  1. Online Retail

The digital age is increasingly disrupting the retail industry globally and redefining the role of the traditional store. Although online retail is still in its infancy in sub-Saharan Africa, the industry is certainly showing promising potential.

Due to under-developed brick and mortar retail, e-tailing holds a unique value proposition for sub-Saharan Africa, not only in terms of better pricing but also for the convenience it provides as shoppers no longer have to sit through the gridlocked traffic in places like Nairobi and Lagos to reach markets or shopping malls.

The publication looks at each of these trends in greater detail and highlights examples of where the trend can be seen. The publication also takes a look at other trends including, a more sophisticated retail sector, moving into secondary towns, import substitution and supply chain optimization which you can read more about here http://pwc.to/3uyblL2