In addition, businesses that require adherence to global standards (e.g. strict food safety standards) must be prepared to invest in training and know-how building with local suppliers. A partnership mentality must be adopted and common goals and strategy defined.
Finding suppliers who meet the necessary standards can be challenging when contemplating expansion into Africa. It can be a time-consuming process and possible delays (as long as two years) need to be factored into business plans. Our experience has shown that suppliers with the right attitude and vision trump current technical capability every time.
Secure the right property
The added cost of property rental and construction requires a strong business model to make any operation viable. Securing the right space can be significantly more expensive than in the developed world. A-grade retail space, in particular, is in short supply in many African countries. In addition, it’s been known for businesses to have to pay up to five years worth of rental in advance to secure the property of their choice.
As in all parts of the world location is critical for retail however when new to a market your retail outlet is often the most effective billboard you have and therefore location can take on even greater significance. These better locations come at a cost – a cost which eventually ends up being passed onto the consumer.
Construction also becomes incrementally more costly the further north you go, with skills shortages, availability of materials and extended construction timeline being the main hindrances.
The real challenge of turning the potential of Africa into profit comes when you have to find ways of passing these incremental costs onto the consumer in an environment where the current levels of affordability are low.
Building brand equity
Businesses need to factor in building brand equity when entering new markets. While a small percentage of people – mostly those who have travelled abroad, may have experienced the brand, the vast majority will not have. Brand building is paramount and product benefits need to be securely landed in consumers’ minds. This will not happen overnight, or cheaply, and businesses will need to work very hard to create opportunities for new consumers to experience their brand and start to develop a love for it.
Creating jobs and managing people
On the back of insisting on global standards from themselves and their suppliers, businesses need to provide world-class training and systems to the people they employ. The people of Africa are vibrant, intelligent and eager to learn. When provided with world-class training, they often execute their jobs to a standard that exceeds many of their developed-world counterparts. A job as a cook may be regarded as a humble start, but is actually a foot on the first rung of the career development ladder and has produced many an industry and community leader.
Notwithstanding the challenges involved, investing in Africa – if done properly and to world-class standards – is expected to pay off handsomely. As the economies grow and stabilise and access to disposable income increases, so do the prospects for businesses with tenacity and the intent to embrace this beautiful continent.