Range of changes spur pace of growth in Africa’s retail sector

Communication a major plank in retail expansion.

Africa’s retail profile has undergone a tremendous change over the past couple of decades, as an influx of cheap Chinese goods, better technology and increased personal income have changed the way people shop.

Sprawling markets where live chickens, cassava roots and colourful locally made fabrics still thrive but increasingly they must share the terrain with hi-tech vendors and branded football shirts featuring clubs such as the Abu Dhabi-owned Manchester City.

Communication is arguably the most significant long term retail development, universally applicable across Africa. With fixed-line communication spotty at best, the mobile phone revolution has swept the continent.

In 2001, there were fewer than 21 million mobile phones in circulation in Africa; now, 735 million mobile phones are in use, according to a study by M&C Saatchi Mobile, a global mobile marketing agency.

This in turn has created a thriving business in handsets and mobile phone stores have become an indelible part of the African urban landscape.

The growth in mobile phones has also led to fibre-optic submarine cables to Europe, the Middle East and elsewhere, installed to help build up broadband capacity across the continent.

As the internet spreads, so has online shopping.

According to Bidorbuy, the South African version of eBay that dominates the continent, “generator” is the most searched for item.

“Trends include new channels for basics and dry goods, continue on to fresh produce and modern shopping channels, as well as online retailing which already starts to establish in markets like Nigeria,” says Mirko Warschun, an AT Kearney partner and the leader of the firm’s consumer industries and retail practice for Europe, Middle East, and Africa.

China’s vast production of low-cost goods is an unrelenting force influencing price-sensitive African consumers.

China is now Africa’s largest trading partner and the Asian powerhouse sells good worth about US$100 billion a year, mostly in manufactured goods, to the continent, according to the World Bank.

The phenomenon has produced its share of fierce criticism, centred around the claim that Chinese products are pushing out local entrepreneurs who cannot compete on prices.

Yet it has also produced a thriving class of African small businesses that depend on the very same cheap products to thrive.

More than 20,000 Africans are estimated to live in China’s export-oriented Guangdong province, the majority earning a living as middlemen for the thriving cross-continental trade.

It is a trade that can only grow.

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