Looking beyond SA domination of African retail market
LOCAL brands may well dominate the African retail scene, but their domination of the listings masks more subtle trends in the continent’s growing and changing retail landscape.
South African travellers in Africa have become used to seeing familiar brands in shopping malls and high streets across the continent, but soon their compatriots from other African countries might experience a similar brand-weariness when shopping for goods, especially groceries, even while on trips away from home.
Booming African brands and improving intra-African trade might be seen as a reason to rejoice for the Afrocentric shopper but others, who have grown tired of the ever expanding influence of home-grown giants, might just roll their eyes and seek out a less formal option. If they headed to the markets and informal traders they would be joining around 90 percent of the continent’s population who still do their shopping there.
Deloitte yesterday released its inaugural African Powers of Retailing 2015 report, which ranks South African retailers in the top 10 positions, but a closer look at the wider survey reveals more subtle trends.
Progress
Deloitte plans to use the new annual report to track the progress of the top African listed retail performers on the continent.
Of the top 25 African retailers, with a combined presence in 21 countries, 10 now come from countries outside South Africa, with three Zimbabwean retailers, two from Botswana and one each from Kenya, Morocco, Tunisia, Nigeria and Zambia.
Botswana’s Choppies was the fastest growing retailer of the top 25 African retailers of 2015, recording 24.4 percent year-on-year growth for the financial year 2013 over 2012.
Shoprite was named the number one retailer in Africa, followed by Massmart and Pick n Pay, with Spar Group claiming fourth place and Woolworths coming in at number five. A total of 36 percent of the top 25 listed retailers are involved in food and beverage retailing, with 24 percent focused on clothing and accessories.
Speaking at the launch of the report, Dylan Piatti, Deloitte’s chief of staff for consumer business in Africa, said: “The more mature South African retail market has performed strongly from a continental perspective, which is one of the reasons international retailers eager to establish a footprint on the African continent have tended to enter via South Africa.”
“However, there is an emerging shift in the regional focus of entry, as well as key players looking beyond African borders for expansion opportunities in Asia and the UK.”
Informal channels
The potential inherent in the African market is underscored by the fact that, according to the UN Economic Commission for Africa, almost 90 percent of transactions in the African retail market still occur through informal channels. This peaks at 96 percent to 98 percent in key West African markets such as Ghana, Nigeria and Cameroon.
This compares with just 40 percent in South Africa, as the continent’s most mature retail market. The potential is astonishing when one considers another statistic from Deloitte: the top 25 listed retailers in Africa collectively earned retail revenue of $44.3 billion (R610.2bn) in the fiscal year 2013, contributing about 5.4 percent to the total African retail market size of $823.2bn.
A number of international retailers have entered the African market in recent years, notably Wal-Mart, which purchased a controlling share in Massmart in 2011. Other retailers include: Mango, Topshop, Zara, Cotton On and luxury brands Prada and Hugo Boss.
E-commerce is another area set for massive growth in Africa. An expected surge in mobile internet access means that the 20 percent of Africa’s population that is online is expected to rise sharply (closer to Asia’s 32 percent or Europe’s 75 percent), which is expected to help e-commerce sales reach $75bn by 2025.