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Economic growth, coupled with an emerging shopping culture and a boom in shopping centre space, is energising the retail sector in Africa.

December 2015

“Success in Africa requires analysis, understanding and the flexibility to customise, but for those willing to take the risk, the rewards are plentiful.” The statement made by Mike Moriarty, Partner at A.T. Kearney, relates to the retail opportunities available on the world’s second largest continent.

Relatively unknown in terms of its retail competency, Africa’s landscape is changing. Driven by growing economies and a rising shopping culture, the continent’s retail opportunities are now better than ever. A recent study by the Economist Intelligence Unit found that institutional investors now regard Africa’s emerging middle class and its growing consumerism as the most attractive aspect of investing in Africa, more so than its commodity wealth.

A.T. Kearney’s 2015 African Retail Development Index (ARDI) reconfirms the potential of many nations throughout Africa – not just the often discussed markets like Nigeria, Ghana and South Africa, but also small dynamic markets such as Gabon and Angola.

“Sub-Saharan Africa is still the next big thing, and likely will continue to be for the next several decades. It is one of few markets with annual GDP growth of more than 5%. Its young and connected middle class is growing fast and still deciding on its favourite brands. In short, it is brimming with potential,” says A.T. Kearney.


For many years, South Africa was seen as the gateway to Sub-Saharan Africa because it was better developed, had a mature retail market, good infrastructure and a stable stock exchange. However, according to Jaco Prinsloo, Principal, Consumer Industries and Retail Practice at A.T. Kearney, South Africa is no longer the only route to take.

“Most of the investment [now] is on the back of better infrastructure being established in the ‘new’ countries and the emergence of a shopping culture boosted by shopping malls being built. Slowly as the middle class rises there is more spending power to purchase brands and many African consumers are in the early stages of deciding on their favourite brands – an opportunity not to be missed for leading FMCG (fast moving consumer goods) firms,” says Prinsloo.

In addition, over the last decade most countries have seen a lot of change but the type of change is extremely varied. “For example Lagos in Nigeria is a mega city with over 20 million inhabitants and it has a fairly large upper income segment, yet there is still a massive low income segment where people need to survive on less than USD 2/day. So they don’t have a large middle class making shopping cultures and needs very distinct between rich and poor.”

Although according to Prinsloo a country like South Africa is more diversified and caters for consumers on different income levels in formal shopping environments, however even for the most developed economy on the continent only 60-70% of retail is formalised with the rest still taking place in informal settlements.

Another change in retail over the last decade has been observed in Ethiopia. The country does not allow any foreign direct investment in retail, yet it has a vibrant retail market emerging with the successful cash-and carry concepts named Alle. “The government wanted to improve the supply chain to remove costs and deliver better quality and priced products to the consumers which they achieved by setting up their own retail chain and locking out any competition. This was done on purpose, almost like an incubator, to grow its own domestic brand and protect the market,” Prinsloo adds.

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