Rwanda. Mozambique. Ethiopia. They’re hardly the sort of countries – or markets – that you’d expect to be associated with international retail and branding. Yet, according to groundbreaking new research published by global management consultancy AT Kearney, these are, for retailers, among the most attractive markets in terms of expansion in Africa. Tanzania. Namibia. Botswana. Gabon. Yes, even Gabon. According to the 2014 African Retail Development Index (ARDI), this tiny, resource-rich francophone nation on Central Africa’s west coast is one of the continent’s ‘small gems’, with retail sales growing about 13% annually. ARDI’s list continues, with it more and more surprises, and perhaps even the sudden desire to reach for an atlas.

The AT Kearney study was designed to help large, organised retailers determine where and how best to enter sub-Saharan Africa’s rapidly growing retail sector. The ARDI Top 10 identifies the African markets most attractive for retail expansion, both at present and going forward. It also highlights the untapped potential that Africa’s middle class holds, and the opportunities it offers brands and companies looking to attract and retain customers in Africa.

The continent currently has the fastest-growing middle class in the world. By 2020, nearly half of all Africans will be living in cities, and as disposable incomes rise, consumer spending is expected to grow to almost $1 trillion.

‘This growth has been driven by increased investment by international companies seeking business opportunities in Africa,’ says Michael Gamwo, international trade manager of Wesgro, the Western Cape’s official destination-marketing, investment and trade-promotion agency. ‘Many of these investors hire skilled professionals from the African diaspora of Europe and the US, resulting in a surge in the middle class who are very familiar with international brands.

‘The African middle class is tagged as the new breed of consumers eager to show off their modern tastes and social status through the purchase of branded goods, particularly in modern shopping malls, as opposed to traditional ways of buying products on informal street markets,’ says Gamwo.

‘Hence the surge in development of shopping centres all over Africa. In Ghana, for instance, 14 new shopping malls were built in the past two years. The growing middle class in Africa is responsible for developing other sectors such aviation, modern residential properties, fast food and services such as ICT and creative industries that were either not available or as developed a few years ago.’

So what does this mean for brands? A McKinsey report titled Rise of the African Consumer answers that question – and the answer will make brand managers across the world rub their hands together in delight. Brands, it turns out, play an important role in Africans’ purchase decisions. In fact, brand loyalty averages 58% in both North and sub-Saharan Africa.

The report states: ‘In North Africa, 72% of consumers equate popular brands with quality. The proportion of North Africans willing to pay a premium for well-known brands is correspondingly high in the clothing, grocery and mobile-phone sectors. While North Africans are loyal to a selection of brands, sub-Saharan Africans tend to be loyal to a specific one, and are generally more conservative about trying new things. Our study found that 43% of North Africans show a willingness to try new things, compared with 35% of people in sub-Saharan Africa.’

The report further states that, while North Africans express a strong desire for international brands rather than local ones (more than 60% of respondents agree that ‘international brands are more fashionable than local brands’), sub-Saharan Africans are far more accepting of local brands.

‘Emerging markets are more likely to discuss purchasing decisions and make comparisons with neighbours and friends’

GLEN MEIER, MANAGING DIRECTOR, BOOMTOWN STRATEGIC BRAND AGENCY

In Nigeria, for example, only 11% agree with that statement, while in SA the proportion is 12%. ‘This offers a big opportunity for local companies to create and build their own brands,’ states the report.

Part of that brand-building exercise is, of course, activations. According to Stephan Botha, Provantage Media Group’s general manager of Africa and new business development, a fully integrated approach is required for a brand to rise above the clutter. ‘Activating in Africa is not without its challenges,’ he says. ‘Power outages, transport problems, general infrastructure and other issues can put a spanner in the works.’

Botha goes on to say that, when it comes to brands, African countries do not fit a one-size-fits-all scenario. ‘Think of Namibia,’ he says. ‘What works in Windhoek may not necessarily receive the desired response in Oshakati. Activations, as well as the various touch points in the mix, need to be tailor-made to LSM group, language group, culture and environment.’

That includes social media. As Botha points out, Africa has 930 million handset users while 112 million Africans use smartphones. ‘These figures show that for a large portion of the population, there is an eagerness to connect and communicate via phone and social media.’

Botha illustrates the point with the example of his company’s recent brand activation campaign for Doritos chips in Zambia.

‘The campaign was a fully-fledged, through-the-line awareness drive that included radio commercials, static advertising, sampling activations, a digital campaign, social media and high-profile events to ensure objectives were not only met, but surpassed,’ he says.

‘Furthermore, an original Doritos jingle was produced and [dance moves were] choreographed for the promoters to create the “wow” factor. Moreover, a drive to the Doritos Facebook page encouraged interaction.

‘Over the two months that the campaign was running, sales grew by 230% and the Doritos Facebook community grew from zero to 3 600. The site is still extremely active with fan numbers growing incrementally by the day.’

In emerging markets such as those found across Africa, word of mouth also plays a central role in consumer decision-making. ‘During a recent smaller increment pack launch for First Choice custard we saw the power of word of mouth emerge,’ says Glen Meier, Boomtown Strategic Brand Agency managing director.

‘The new pack was named ‘Pocket Pack’, and after a few taxi-rank activations encouraging trial, consumers were chatting excitedly about the new product, taking the information home with them and spreading the word.’

Meier points out that word of mouth, by nature, means that companies in emerging markets are likely to reap higher returns if they give their efforts a geographic focus, rather than spreading their marketing resources thinly.

The First Choice custard product launch, for example, was concentrated on three densely populated townships – two in Johannesburg and another in East London. Thereafter, the model was repeated in other similar parts of the country.

Meier believes that from a cultural perspective, ‘emerging markets are more likely to be collectivistic, thereby discussing purchasing decisions and making comparisons with neighbours and friends more often than in an individualistic culture’.

That said, ‘A customer is a customer is a customer, no matter where you look,’ says Aki Kalliatakis, managing partner of marketing firm Leadership LaunchPad. ‘However, the needs are very similar at one level, and very different at another level because we see emerging market characteristics. Don’t think that African customers are not discerning.’

The bottom line is that, regardless of whether you are selling insurance to a middle-class family in Gabon, tortilla chips to a Facebook fan in Zambia or custard to a commuter in SA, you had better make sure you deliver on your brand promise. Because, as the ARDI report points out: ‘African consumers are, generally speaking, price-sensitive yet brand-conscious… Indeed, brand-loyal, regardless of how much money they have.’

By Will Sinclair
Image: Fredrik Broden/reneerhyner.com