With Africa being home to more than one billion people, the market presents a massive potential consumer market, population growth remains rapid averaging 2% annually. The middle class are moving to cities creating pressure on the existing utilities like housing and general infrastructure; this presents opportunities for companies to target certain consumer groups with their diverse offerings of goods and services.
Africa’s retail sector remains relatively under-developed at present considering it’s huge potential, with most shopping being done at traditional shops. The lack of physical infrastructure has been one of the main constraints to the entry of formal retailers, as there are simply not enough shopping centres available at present in most parts of Africa. A number of large retailers like Carrefour, Pick n Pay, Shoprite, Naivas, Choppies, Game, Tuskys supermarkets among others, are looking to take advantage of the large market at the low end of the population given their massive spending opportunity. Most countries project that the retail sector is among the six priority sectors projected to make up the largest part of the continent’s (GDP) and to create approximately 50 per cent of total formal employment.
A recent report (2016) by Oxford Business Group placed Kenya’s retail market as the continent’s second most developed, trailing behind South Africa, and the fastest growing sector within the continent. Besides the growth in the traditional onsite retailing sector, technology has fuelled online shopping activities with the growth of online retailing websites like OLX, Jumia, Pigiame and Kilimall and which are expected to grow over the next few years.
With Africa’s rising prominence as an investment destination over the past several years, so the role of retail and consumer goods has taken on greater significance. Sub-Saharan Africa remains one of the fastest growing regions in the world and the successful expansion of a number of global and African retailers and consumer goods companies across the region speaks to the opportunities that exist in this region and in this sector.
With more informed, healthier and young consumers with rapid changes in consumer lifestyles, purchasing behaviour is set to be strengthened presenting immense opportunities to African retailers to expand. The recent adoption in Kigali (March 20018) of the Africa free trade agreement by at least 45 heads of states provides the impetus for this growth.