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Knowing Who Shops for What, Where and When is No Small Challenge in Sub-Saharan Africa
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Knowing Who Shops for What, Where and When is No Small Challenge in Sub-Saharan Africa

Few markets show the immense potential for consumer products companies like Africa does, but that promise is mirrored by sizable challenges as well. Complicated distribution networks stand between retailers and the huge potential of the African consumer goods market. Even with myriad complications, however, companies can overcome the challenge of distribution by getting close to the multitude of small retailers—that’s the true path to success. But before they begin, they need to understand who shops where, for what and when.

In most countries in Africa, modern trade outlets contribute an exceptionally small percentage of CPG sales, as detailed in new Nielsen research. Even in Kenya, one of Africa’s most developed retail markets, traditional trade accounts for only 70% of sales. Comparatively, in sub-Saharan Africa as a whole, 80 % of consumers shop at table tops—which are the dominant arena for everyday buying and selling. In Nigeria alone, consumers have access to no less than 200,000 table tops. While large African and international retailers are making investments in modern trade formats, traditional outlets will remain the dominant channel for reaching consumers for some time to come.

Within the traditional trade environment, there is considerable diversity. In Kenya, for example, 95% of shoppers frequent small, local grocery stores (66% of the store universe), 92% patronize kiosks (24% of the universe) and 89% shop at supermarkets (less than 1% of the store universe). The remainder of the universe is represented by table tops, pushcarts and specialty outlets like pharmacies.

The prevalence of these types of outlets differs by country. In some, the various convenience outlets—table tops, kiosks, market stalls—are prevalent; in others, grocery stores are dominant.

What a retailer stocks, the quantity, the price, the supplier, the frequency of restocking—all fundamental considerations for a manufacturer—vary according to the format, which in turn reflects the purpose of consumers’ visits. Consumers visit grocers and supermarkets, for example, to stock up on packaged goods, as well as home and personal care products. These outlets offer a wide range of items, including new products, and competitive pricing. But they can be hard to get to for the many consumers who do not have their own transport.

In contrast, consumers often shop for everyday goods in the informal outlets that serve their neighborhoods. They are familiar with the vendor and the products, which are helpfully sold in decanted or single servings and for rounded sums of money (e.g., 100 Kenyan shillings or 2 Ghanaian cedis). So while the shops themselves may be no more than a table or countertop, their products unbranded and the product range small—many might sell no more than four different items—they perfectly meet consumers’ needs. They offer familiar goods at the desired price and size, they are convenient and they are trusted.

While consumer trips to grocers and supermarkets are relatively infrequent, visits to informal neighborhood outlets are often daily. Overall, in Madagascar, the consumers in Nielsen’s survey went shopping 70 times a month on average. In Kenya, the average was 38, with some shoppers visiting the same outlet two or three times a day. Such high frequency represents a huge opportunity to connect with potential customers. But seizing the opportunity depends on identifying from among hundreds of thousands of outlets those most likely to promote sales growth.

For additional insight, download Nielsen’s Africa: How to Navigate the Retail Distribution Labyrinth report.