The Bottom Is Still Heavy – Consumer Structure In Africa
The Africa consumer market has been abuzz with the rising of the middle class. The narrative has pushed the marketing fraternity to work tirelessly to not only engage but also maintain this emerging class with goodies and consumption aspects. Many economies around the continent are working hard to not only achieve higher growth, meet their development goals, but also improve the lives of the citizens. Such improvements include the quality of living, consumption and overall wellbeing. However, the bottom is still heavy! This is mainly due to low momentum in lifting the low end to the mid; still a relatively large rural population and overall low sustainable actions to ensure the group that moves to the mid-level does not slip to the low end.
There is little consumption data across the continent. Hence, much of the debate is based on inference and trends from various sectors across the continent. Therefore, it is about joining the dots. Looking at different sectors in isolation as well as in aggregation. Are the consumers across the continent rising as the continent rises?
The last 10 years have seen the rise of an increasing number of channels to reach consumers e.g. supermarkets and development of a formal retail sector. South Africa is a clear leader in formal retail sector. It has a well-developed retail sector, with the strong supporting factors such as availability of large and well-structured retail spaces, logistics and relatively higher income levels. Estimates show about 60% of the retail sector in South Africa is formalized. This is the most formalized retail market within the continent. As incomes improve across the continent, the sizes and varieties may vary.
However, the small retail outlets / kiosks / grocery stores are still predominant channel to reach the bottom consumers due to their convenience in providing affordable stock units. In addition, the role of these outlets is evolving in line with changes in the market. In addition to consumer goods, some of these outlets are taking up areas such as agency services either in banking sector or mobile money services.
Affordability and availability of products within a given location are the factors that are keeping these outlets on the move. In addition, most of the operators of these outlets know their customers, since they operate and live amongst each other within a given location. This provides an opportunity for customers to pick goods on credit and pay after a given duration – at the end of the day, end of the week or by end of the month.
As incomes, habits and preferences change, there has been a rise of the minimarts and small supermarkets within the neighborhoods. Convenience in buying a basket of items from the same premises is a key factor in the rise of these outlets. However, the units of stock have remained relatively small to cater for consumptions within a given location. In some cases, owners have just converted their previous shops to minimarts to cater for the new shopping habits. However, these outlets have only catered for household items, some categories of food items and consumer goods.
Variety of other household items such as clothing, electronics are still acquired through retail outlets, and mostly the informal channels. All sorts of accessories and products, both new and second-hand items are available within the same location. These traditional outlets are still ingrained in the psyche and shopping habits of consumers across most markets in Africa. It is no wonder some consumers will buy packed food items like sugar, salt, soap, …etc. from a supermarket, but then pass by the local roadside market to buy vegetables and other groceries. High traffic to informal second-hand markets for clothing could also be due to perceived price differences and range of choices in such outlets. This implies consumers visiting such outlets are seeking functional items. Fulfilling a function, more than brand preference is the key factor.
Technology, mainly access to mobile phone and use of internet, will continue to play a pivotal role in bridging the gap between the bottom and low-mid level. In the meantime, the bottom remains heavy.
Wishing all our readers happy holidays and a fruitful 2018.