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Berlin - Africa is starting to appear on the radar screens
of Wwestern retailers as they look for the next growth opportunity in emerging
markets while having to cope with subdued consumer spending at home.
Consultants Deloitte and Planet Retail on Tuesday identified five African countries - Algeria, Kenya, Morocco, Nigeria and South Africa - as being among the 10 new markets most likely to appeal to multinational store groups in the coming years.
"All have fast-growing economies, young and growing
populations, and fragmented retail sectors," Deloitte and Planet Retail said in
a report published on the second day of the World Retail Congress in Berlin.
"Moreover, although traditional forms of retailing are still
dominant, a growing middle class is demanding branded products and the
opportunity to shop in modern retail formats," they said.
Africa was thrust into the retail limelight this year when
US retail giant Walmart bought a majority stake in South Africa's Massmart Holdings [JSE:MSM],
giving it a foothold in the continent's biggest economy and a presence in about
13 other African markets, ranging from Botswana to Zambia.
"With the world's largest retailer now active in the
continent it seems likely other leading global retailers will investigate
opportunities in the region," said Ira Kalish, Deloitte’s director of global
research.
Long-term investment
Faced with limited population growth and sluggish economies
at home, many US and particularly European retailers have been expanding into
emerging markets in the hope of finding growth opportunities, but with
competition intense in China and Brazil many are looking elsewhere to gain an
advantage.
This year, for example, Belgium's Delhaize bought Serbian retailer Delta Maxi Group, while Germany's Metro is expanding in Pakistan - two countries also tipped in the report as likely to attract more attention among international chains in coming years.
As most Africans are on low incomes and focused on basic
needs, grocers such as France's Carrefour and Auchan and Britain's Tesco are
set to be the first movers.
Other brands, particularly those focused on clothing and
footwear, could quickly follow.
John McCarvel, chief executive of footwear company Crocs,
told Reuters that Africa was potentially an attractive region, not least
because its trademark plastic clogs are well suited to the hot climate.
However, he said the marketplaces in much of the region were small and the company was focusing in the short term on expanding in Asia and filling out gaps in Europe.
"Africa is the final frontier in retailing," said John
Fraser, an executive at South African store group Woolworths Holdings [JSE:WHL], which this month
outlined plans to more than double its presence in Africa over three years.
He cautioned it was a long-term investment, though, and with
few strong local players in many countries, new entrants might have to seek
partners from outside the sector, meaning it would take longer to establish
themselves.
While a weak banking infrastructure may deter some retailers
from Africa, it could be an opportunity for those prepared to offer their own
financial services, which can boost customer loyalty and give an advantage over
rivals when it comes to larger purchases, he added.
Deloitte and Planet Retail also identified Kazakhstan, Peru
and Vietnam as markets with a high potential.
