Think Local
Still, many brands have little idea how to translate the opportunities into action and profit. International investors have to compete with traditional‘umbrella’market stalls often offering cheap or counterfeit goods. A lack of information about the African consumer is leaving companies at a disadvantage, and it is those with years of experience here that do well.
Then there is corruption and bureaucracy to overcome, while logistics can be unreliable and infrastructure lags behind much of the developed world. Plus, the very diversity of Africa – 54 countries with differing cultures, languages, demographics and currencies – makes local knowledge implicit to success.
It is notable that the brands that are successful are those creating market-specific products catering to the needs of the consumer in different countries. Africa is enormous, and the taste of shoppers in Senegal differs widely from those in Kenya or Zambia. David Gyori, executive director of Banking Reports, which provides banks with research and analysis of economic markets in Africa, says it is the brands that understand these specifics that do best.
“The African consumer is changing at high speed, so a dynamic understanding of their journey is what makes a Western brand especially successful,”he says.“Part of this understanding is the right price point, one that takes buying power into account and that brings the joy of owning a certain brand to the customer at an affordable price.”
Despite controversies, Nestlé has been present in Africa for decades, specializing in food products such as instant coffee and powdered milk.Yet a recent announcement that it will scale back its operations has been attributed to a misunderstanding over the past few years of the continent’s changing consumer base. It is seen to have chased the middle class while neglecting the low-income consumer that was always its major customer base.
In contrast, Unilever has adjusted its strategy to take into account local needs, resulting in double-digit growth on the continent over the past decade. It has created affordable food, water-thrifty laundry detergents and grooming products to fit local tastes, such as a line of black hair products in South Africa, which previously relied on expensive US imports. It has also wisely packaged their products in smaller sizes and at low prices to capture the loyalty of lower income customers.
Gap entered the South African market in 2012, while Walmart purchased a majority share in local retailer Massmart some years