Retail report highlights African countries as “hidden heroes”
Speaking at the World Retail Congress in Berlin yesterday, Deloitte unveiled the updated and extended version of its Hidden Heroes: the next generation of retail markets report, compiled in conjunction with Planet Retail.
The first annual Hidden Heroes report identified the most attractive emerging markets for retailers, beyond China. The other BRIC economies of Brazil, Russia and India led the way, along with rising stars such as Indonesia and Turkey.
This latest report casts a wider net to look at the next generation of emerging retail hotspots. Whilst some countries will be of immediate interest, such as Vietnam and South Africa, others have been included to give a longer term view of where international retail might find growth in five, ten or fifteen years.
What was of interest, was the fact that the report this time revealed that several African countries should be on the radar of international retailers as they seek growth opportunities in emerging markets, reiterating the view of the continent as having solid prospects for consumer driven businesses. African countries dominated the report, making up half of those featured, with Algeria, Kenya, Morocco, Nigeria and South Africa highlighted as the brightest longer term opportunities.
In a press statement released by Deloitte, Robert Gregory, Global Research Director at Planet Retail, said: “Walmart’s entry into South Africa this year has thrown the spotlight on a region that has typically been overshadowed by Asia, Latin America, the Middle East and Eastern Europe when talking about future retail growth.”
“Walmart’s acquisition of Massmart, however, not only gives it a foothold in the key South African market but also a presence in 13 other African markets – ranging from Botswana to Zambia. With the world’s largest retailer now active in the continent, it seems likely that other leading global retailers will investigate opportunities in the region for themselves.”
Ira Kalish, Director of Consumer Business for Deloitte Research in the United States, added: “While the African markets in our report vary significantly in terms of size and level of development, they all represent opportunities for growth. All have fast growing economies, young and growing populations and fragmented retail sectors. For example, 70% of the population of Algeria are aged between 15-64, whilst 25% are 14 years old or younger. Morocco is a relatively stable, high growth economy with close economic ties to Western Europe, whilst Kenya is leading a number of sub-Saharan countries in generating significant growth and increasing consumer spending power.”
The continent’s economic powerhouse, South Africa, is likely to remain the first market international retailers venture into as they embark on an African strategy, with a per capita income similar to that of Turkey, which means it is a relatively affluent market among emerging countries. Consumer spending, at 61% of GDP, is high relative to other emerging countries and is likely to remain so for many years.
This report is further confirmation that Africa really is more than just a commodities story.
Imara is an investment banking and asset management group renowned for its knowledge of African markets.