Africa Consumer Business Exco

The Frontier Forum – The African Consumer Outlook

Open sign hanging in window

Retail industry leaders paint a rather promising picture of African consumers; but a one size fits all mentality may not be the best approach to reaching them.

A number of prominent retail industry leaders gathered at the Frontier Forum held at the Industrial Development Corporation on Thursday, October 30th to discuss the future of Consumer Business in Africa, specifically relating to understanding the African consumer.

The main thread emerging from many discussions was that there is, in fact, no single, summarised view of the African consumer. Demographics, development levels and needs vary vastly on the continent, and no single approach is optimally leveraged in each African country or region. However, Africans are, in general increasingly becoming wealthier, with a greater capacity to spend on retail products.

Dr Martyn Davies, CEO of Frontier Advisory, opened the forum by depicting the prevailing young age demographics across most African countries. He believes that this will drive trends going forward. In addition, Dr Davies believes that the view of potential markets being divided by country borders is one of the past, and that clusters of populations truly are the basis from which retailers begin to analyse potential markets for entry.

The many faces of the African consumer

The degree to which African consumers differ was emphasised and explored by a number of key speakers. The Executive Director of Marketing and Communications for Africa and the Middle East at Nielson, Ailsa Wingfield, provided a few examples of the number of ways companies may go about analysing consumers in Africa. Using Ethiopian consumers as an example, Ailsa detailed the importance of looking beyond demographics and the ability of African consumers to spend, and instead delving into their lives to create a more telling, multi-dimensional picture; including, for example, exploring the real needs, traditions, cultures and values prevailing on the continent. How African consumers typically live their everyday lives will affect the extent to which brands are adopted in certain markets and how products and services will be used by consumers, including possible adaptations to products that retailers may not have anticipated.

Maintaining the essence of Africa in products and services offered

Members of the panel discussion went on to build upon this message, including Dali Tembo, Africa Business Director of Instant Grass, who discussed how Africans are not necessarily losing their traditions in the midst of their exposure to Western culture. Africans are also seen to value and support products and services that are of African origin, more so than was previously thought, and a number of speakers saw this as the desired future – the state where an increasing number of products and services are produced by Africans, for Africans, and for export to the rest of the world. Consumer spending alone will not drive sustainable growth for all on the continent.

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Panel discussion with (from left to right) Dr Martyn Davies, Christopher Gilmour, Swaady Martin-Leke, Dalie Tembo and Ailsa Wingfield

Finding opportunities in e-Commerce within and despite Africa’s challenges

Despite the exciting dynamics, and the wealth of opportunities within the continent, challenges for the retailer still exist, including high land costs and a lack of skills. However, even these challenges may be opportunities for businesses that choose to tackle them from such a viewpoint. Deloitte Digital Africa Associate Director, Rob Latham, discussed the future of setting up e-Commerce supply chains for accessing the African consumer, and in light of the prevailing African challenges such as a lack of good infrastructure, this can be done successfully, with careful thought and effort. Flexible, innovative business models, that leverage the benefits of partnerships along the supply chain, are assisting businesses to thrive despite these challenges.

Regarding logistics, that are part and parcel of e-Commerce activity, Rob sees a rise in small players that service localised regions, who connect to other small logistics companies to create a smart network of operators competing with the larger logistics companies. These smaller companies are increasingly being preferred by e-Commerce businesses.

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One-on-one discussion between Dr Martyn Davies and Rob Latham

Possible growth areas in the next five years, as mentioned by Rob, include digitalising workforce engagement to ensure that work is done more effectively and efficiently. Deloitte Digital is already helping clients to implement technology for companies to engage with employees and ultimately improve productivity and profitability.

Overall, there is much opportunity for retailers on the African continent. Innovation and a true, genuine understanding of African consumers will differentiate businesses and determine their success in entering and staying in their chosen markets. Entrepreneurs should take note of the real needs of African consumers, and seek opportunities to meet these first and foremost, in simple ways that can be easily understood and adopted by the intended consumers.

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David Graham

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