Retail industry in sub-Saharan Africa offers huge potential, says DHL

Retail expansion is key to DHL Express’s Africa business strategy. This is according to Sumesh Rahavendra, head of marketing for DHL Express, sub-Saharan Africa.

Sumesh Rahavendra, head of marketing for DHL Express sub-Saharan Africa

Sumesh Rahavendra, head of marketing for DHL Express sub-Saharan Africa

The recently released A.T Kearney African Retail Development Index further validated the company’s plans as it ranked the top 10 countries in sub-Saharan Africa for retail expansion and highlighted Rwanda, Nigeria, Namibia, Tanzania and Gabon as the continent’s most attractive markets for retailers looking to expand.

According to Deloitte, Africa’s middle class has tripled over the last 30 years, and the current trajectory suggests that the African middle class will grow to 1.1bn in 2060, making it the world’s fastest growing continent. This growth, coupled with the forecasted GDP growth of over 6% which the International Monetary Fund is predicting, drives the potential for retail growth on the continent significantly through increased purchasing power and consumer demand.

The growth of e-commerce and access to technology has further upended the traditional shopping experience for consumers, and retailers are increasingly beginning to maximise the opportunities arising from the growing number of digitally-empowered consumers, who are opting to purchase goods via e-commerce channels

“We are now in a position to directly relate growth in our retail footprint to growth in our earnings so we know the potential is huge,” says Rahavendra.

According to the index, African retailers such as South Africa’s Shoprite, which operates in more than 16 African countries, and Nakumatt, which is based in Kenya and has stores in neighbouring Uganda, Rwanda and Tanzania, have done most of the expansion, but global retailers are moving in. In 2011, Walmart acquired South Africa’s Massmart, and it plans to open 90 supermarkets across Africa over the next three years.

DHL Express, which has a retail presence in more than 2,400 outlets across Africa, will continue its aggressive expansion strategy in Africa in 2014. “We have made great progress in making the global market and world at large more accessible and connected by increasing the number of points where customers can access DHL and our global network. This allows anyone – from a student to a small business – to access over 220 countries and destinations that we serve.”

Key retail markets for DHL currently are Nigeria, South Africa, Kenya, Tanzania, Uganda, Ghana, Senegal, Côte d’Ivoire, the Democratic Republic of Congo, Zambia and Zimbabwe.

Commenting on the general retail landscape across Africa, Rahavendra adds: “Supply chains in Africa are more challenging than many other markets in the world. The key to success is understanding these challenges in order to offset the risks versus the opportunity which the continent offers. This knowledge will allow retailers to service markets with a supply chain that is agile enough to respond quickly to sudden or unexpected changes, flexible enough to customise products and efficient enough to protect margins. We have been active on the continent for over 36 years, and being the only international express company to operate our own airline and extensive infrastructure throughout Africa, we are well positioned to connect Africa with the world.”