It is rarely mentioned countries, like Gabon, Botswana and Angola, that are increasingly becoming attractive for multinational retailers looking to launch and expand on the African continent, according to a new report. These countries are small and dynamic, their income levels are growing and their retail markets are unsaturated – offering ample opportunity for the enterprising retailer.
AT Kearney’s 2015 Africa Retail Development Index (ARDI) ranks the top 15 retail markets on the continent based on how they fare on four indicators: market attractiveness, market saturation, risk levels and the time pressure to launch or expand operations.
“The challenge in Africa’s retail sector is not looking at one opportunity, but a set of unique differences that give rise to distinct opportunities,” says Jaco Prinsloo, Principal at AT Kearney’s Johannesburg office and co-author of the index.
This is why a small country like Gabon – with a population of 1.7 million people and one of the highest income per capita levels in sub-Saharan Africa – at $21,600 according to AT Kearney – tops the index. There’s little competition in its retail sector, compared to South Africa, a country with a highly saturated retail market.
|Country||Retail market stage of development|
|6. South Africa||Mature|
|13. Cote d’Ivoire||Basic|
While Gabon may top the index, the consulting firm argues its small size might be a downside: its retail market may not be ideal for a big retailer who is interested in big volumes and scaling their operations for example, but it may be ideal for a specialty retail chain in fashion.
Marieke Witjies, a consultant with AT Kearney and co-author of the index said that despite African markets broad challenges, retailers who are in it for the long-haul and those that take considered risks could reap the benefits.
“To stay ahead of the curve in Africa’s, retailers need to ask themselves this question: Do I want to be a first-mover, or will I follow once the infrastructure is set up?,” says Witjies.
Africa’s largest retailer, Shoprite, now with 189 stores across 15 African countries, is a good example of this. After struggling to find real estate for its expansion plans in a number of African countries, the retailer decided to form its own real-estate arm. In Nigeria, the retail giant has set aside $125 million to build 10 malls that will have anchor Shoprite stores, as well as provide retail space for other retailers.
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