Insight’s retail study tour to South Africa introduced participants to the convenience store 반값택배 landscape and the broader retail environment in the region. The itinerary included site visits to convenience stores, forecourt operators, franchised supermarkets and a guided tour of the Spar distribution centre and retail design studio. It also included presentations from leading fuel operators and a chance to meet senior executives.
Retail is small-scale and fragmented in Africa Convenience Store
Retail is small-scale and fragmented throughout Africa, with 90% of retail transactions conducted through informal channels. As a result, African retailers are poorly equipped to manage their businesses, which means they are unable to properly optimize their distribution and sales strategies. In addition, they lack the purchasing power and working capital necessary to scale their operations. The result is that they end up paying high prices and earning low margins. As a result, the informal African retail market is struggling to grow.
The fragmented retail market in Africa creates problems for consumers. This is because the goods must be passed through several intermediaries before reaching the retail outlet. Food products, for example, lose visibility between the producer and the retailer, resulting in higher prices. The fragmented nature of retail in Africa also results in high prices for consumer goods.
Small-scale retail in Africa is difficult to scale, particularly because distribution and access to finance are difficult to overcome. As a result, e-commerce platforms must differentiate themselves from competitors by offering products and services that will help merchants grow their businesses and meet the needs of customers.
Traditional retailers are the cornerstone of African commerce
Today, millions of small independent shops make up the cornerstone of African commerce. Despite the digital revolution and diversification of the retail sector, African consumers still largely purchase their goods from independent shops. In fact, 70% of all African consumers buy their food and personal care products from these stores.
Despite this fact, digital technology providers are trying to address the problems of traditional retailers. For example, inefficient distribution systems force traditional retailers to close for long hours and make it impossible to obtain enough inventory. One example is Nigeria’s B2B digital marketplace Alerzo, which allows up to 100,000 users to buy inventory directly from manufacturers using peer-to-peer transfers and cashless payments. Other examples include the Kenyan procurement marketplace Wasoko, which facilitates payments via a mobile app.
Although online sales make up only a small percentage of the overall retail sector, traditional retailers are making significant investments to compete with pure-play online sellers.
Hyper-local retail has evolved to serve the needs of African consumers
Hyper-local retail has diversified its services to meet the needs of the African consumer. Today, millions of small independent stores are operating in Africa, with some offering more than just daily essentials. Some even offer telecom services. For example, 69% of small retail outlets in Egypt sell mobile phones. And in Kenya, 97% of small retailers accept mobile money.
This new model of retailing has made it possible for smaller retailers in Africa to offer their products and services online. Many of these retailers are digitally savvy and have the skills to update their businesses. This makes it possible for these businesses to offer innovative solutions. They also have the ability to customize and personalise their offerings, which is essential for addressing the needs of African consumers.
The advent of internet technology has drastically changed the retail industry. Consumers today expect a seamless experience across channels and locations. Retailers must continually adapt their product offerings to meet these demands. Moreover, retailers must constantly assess consumer trends and determine the performance of their competitors. To keep pace with these trends, businesses must also gather deep insight into consumer moods and behaviors.