Konga’s Ekeh, Artee’s Keswani, Sundry’s Enunwa talk up repositioning retail business in Africa
January 3, 2023557 views0 comments
By Onome Amuge
Africa is home to an estimated 1.3 billion people, marked by a growing youth population that presents a massive potential retail consumption forecast of about $2.1 trillion by 2025, according to the African Development Bank (AfDB).
However, the retail market in the second largest continent by population and landmass is considered underdeveloped and largely informal due to an absence of an organised structure.
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Market reports show that despite contributing about 15-30 percent to the continent’s gross domestic product (GDP) and providing immense employment opportunities, retail is yet to be accorded the status of a formal course of study like marketing, accounting, or economics. Furthermore, retail practice in Africa is yet to be standardised to the status of a profession, making it very differentiated from other retail ecosystems around the world.
A report by the Africa Retail Academy, Lagos Business School, showed that there is a unanimous position that governments in Africa have taken the retail sector for granted because they perceive it as ordinary buying and selling. As a result, the policy space in Africa is seen to have neglected retail and sometimes even stifled it.
The report acknowledges that retail is much more than buying and selling and entails a gamut of operations, procedures, processes and activities across a wide spectrum of the retail value chain. It also highlights huge opportunities and resources that exist in the immediate environment.
In a move to further address the challenges hindering the growth of Africa’s retail ecosystem, the Lagos Business School recently organised its first Africa Retail Congress which convened stakeholders in government, the retail sector, and academia who presented robust discussions and deliberations on the theme, “The Future of Retail: Positioning Africa as a Retail Hub”.
The Congress identified the evolution of retail as a transition from informal retail to modern or formal retail and then to e-commerce, in that order, while charging stakeholders to leverage existing informal knowledge and structures. Stakeholders were also advised to embrace modern trends by adopting technology and innovative strategies to grow from the present situation to a future where Africa leads the charge as a retail hub.
Delivering the keynote address on the future of retail in Africa, Leo Stan Ekeh, chairman of Konga, described retail as the sustenance of any economy and one of the few businesses that can be built on trust.
Ekeh emphasised on the strategic importance of the trust economy as well as the need to integrate infrastructure and technology while leveraging existing physical stores in positioning Africa as a retail hub.
He identified some of the challenges bedevilling the retail sector in Africa to include blackmail, fake products, fraud, scattered infrastructure, and poor logistics.
On the issue of securing customer value, Ekeh noted that the key is to leverage technology and existing physical stores. He advocated electronic biometric census capture with an emphasis on iris scans as opposed to fingerprints, and also advised censoring vehicles for easy tracing.
The Konga chairman identified several opportunities for growth in the African retail sector, pointing out that unreached and under-reached customers, for example, the ‘mom-and-pop’, are potential avenues for growth. He also highlighted the scarcity of digital marketers, African population growth, and infrastructure challenges as offering great opportunities in the African retail space.
Other opportunities identified by the digital entrepreneur are the fact that banks are being choked and will soon be under pressure to give out more loans while multinationals are itching to come into the retail space in Nigeria and Africa.
He, therefore, advised retailers to be operationally diligent, technologically informed, and financially prudent to successfully navigate the murky waters of the African retail sector.
Haresh Keswani, chief executive officer, Artee Group, in his presentation identified retail as a business that thrives by focusing on connecting with people: staff, customers, and suppliers.
Keswani emphasised that human capital is key to the success of retail. As such, he advised that retailers must invest in their staff, train them, treat them with respect, and give them a sense of ownership.
According to the ace investor, the first generation of retail outlets in Nigeria, including Kingsway, Leventis, UTC, and the rest, collapsed because they did not respond to changes in consumer behaviour.
Keswani therefore stated that second-generation retail businesses must understand and learn from history by adapting to consumer behaviour and understanding what it takes to keep the customer happy.
Emphasising the centrality of people to the success of the retail business, he identified four ‘legs’ of retail business to include staff, suppliers, consumers, and government policies.
The Artee Group CEO advised that retailers need to invest in employees, give them a sense of ownership by enrolling them in the vision of the company, and avoid being ‘bossy’, stressing the importance of credibility between the retailers and their suppliers.
Speaking on consumer satisfaction, Keswani said, “Every retailer’s focus should be to understand what the consumers want and how to communicate the brand and deliver value to customers at great prices while providing product assurances.”
He further noted that supportive policies are critical to the success of retail in Africa, adding that retail policies are critically missing in Nigeria (and Africa).
“The government thinks retail is trading. But it is not. There is thus the need for stakeholders, especially the Lagos Business School (LBS), to sensitise the government toward the understanding that retail is not just trading, and to push the advocacy on retail policies,” he said.
In a panel discussion with the sub-theme, “Positioning Retail in Africa for Growth”, experts in the retail industry discussed the opportunities in retail and how stakeholders can leverage on them to achieve maximum productivity and development.
Joyce Nwachukwu, commercial director, NielsenIQ West Africa, observed that data trends are showing great opportunities in retail.
“For instance, there are over two million stores in Africa, 50 percent of which are in Nigeria. Informal trade constitutes about 98 percent of Nigeria compared to formal trade but the good news is that both formal and informal trade sectors are growing,” she said.
According to Nwachukwu, retailers must understand where these growths come from, how to leverage available data as most innovations are bound to fail without data, and which area to key into and how to innovate in that space.
The commercial director also dwelt on the need for retailers to cooperate with one another and collaborate with relevant stakeholders to have a common standard for benchmarking formal trade.
Wambui Mbarere, chief executive officer, Retail Trade Association of Kenya, pointed out the need to professionalise retail like any other profession as opposed to the current situation where people do retail as a stop-gap.
“Retailers have the skills, but they have not taken ownership of retail by formalising through a curriculum-based retail education,” she said.
Mbarere also emphasised that African retailers need to create ownership of retail by keying into all the necessary needs of each sector such as logistics and the like.
She urged African retailers to own the retail space by focusing on niche creation, adding, “The key is to differentiate as opposed to ‘сору and раste’.”
On his part, Ade Sun-Bashorun, chief executive officer, FoodCo Nigeria Ltd, noted that the retail landscape in Africa is characterised by a customer base that has a dual profile: the exposed customers who are excited about modern retail on the one hand and traditional customers who are only used to traditional channels.
Current economic crises notwithstanding, Sun-Bashorun observed that there is an enormous amount of capital finding its way into the growing VC industry. He added that there is a vast population of young bright Nigerians and Africans who are keen to go into entrepreneurial ventures.
“As the world continues to tap out into growth opportunities in other climates, it will continue to look to Africa as the horizon for growth,” he remarked.
The FoodCo CEO said critical challenges along the way include the need to build a talent base with technical and operational expertise across the retail value chain. He also stated that there are enormous opportunities for services to serve the retail industry and promote quicker scaling through the provision of better infrastructure to provide support/logistics services.
He further noted that opportunities exist in customer segmentation if retailers are prepared to find a niche to be owned in every market, perhaps in terms of the speed of service delivery or product specialisation.
“The key is to ensure that products and services are truly differentiated in the market. The more of this that can be done, the faster the growth and the more profitable the retail sector will be,” he said.
Ebele Enunwa, founder/CEO, Sundry Markets Ltd., remarked that growth in retail is underpinned by growth in the economy.
“Retail cannot be dislocated from the economy because anything that is produced must get to the consumer. And almost anything that gets to the consumer gets to the consumer through retail,” he said.
In his assessment of the global retail sector, Enunwa noted that retail, especially in Europe, has evolved from traditional markets to modern markets and then to e-commerce, but Africa still lags.
He opined that traditional retail is not a hindrance to the African retail industry as the knowledge base in traditional retail is required to drive the necessary evolution of modern retail in Africa. He, however, pointed out that it requires modern infrastructure to evolve, adding that consumer segmentation is key to driving retail in Nigeria and Africa.