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Africa: How To Navigate the Retail Distribution Labyrinth

FMCG and Retail | 25-02-2015
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Africa is on companies’ growth agenda for obvious reasons. Six of the 10 fastest-growing economies in the world are in Africa, it has the world’s greatest proportion of young people, and it has a burgeoning urban population with growing demand for many goods not yet widely available, as well as the means to buy them.

With the exception of South Africa, modern trade is at an early stage of development. Indeed, the most common shopping channel is the table top; a stall set up at the side of the road or in the local market to capture local and passing trade––the emerging-market equivalent of the convenience store.

In a recent Nielsen study of sub-Saharan countries, we found that 80% of consumers shopped from table tops, of which there are no less than 200,000 in Nigeria alone. In addition, Nielsen retail sales data shows that some 40% of consumers shopped in small, local grocery stores, which account for nearly 50% of consumer goods spend. There are more than 550,000 of these outlets in the countries monitored.

In this environment, the approach to market is hugely complex. Manufacturers need to reach large volumes and many different types of outlets, figuring out the different role each plays for the consumer, and how to influence demand.

How Consumers Choose

Consumers continue to show a powerful preference for products they know, have tried before, or that have been recommended to them—not surprising in an environment where budgets are tight and a disappointing purchase is an expensive loss. But their level of caution differs by country. Our data shows that in Nigeria, for example, consumer willingness to try new products increased in the third quarter of 2014, but decreased in Ghana. This kind of data helps manufacturers understand consumers, of course, but it also spells out how important it is for manufacturers to get close to retailers and gain their trust.

Tagged:  SHOPPER  |  CPG AND RETAIL  |  DEMAND  |  AFRICA
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