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The African consumer grows
2012/05/21

NAIROBI, (Xinhua) -- Growing consumer awareness in Africa has emerged as one of the main factors that will define the growth of African retail market.


This analyst's say is due to the rising consumer activism driven by the rising number of consumer lobby organization and access to the internet, enabling consumers to choose high quality over price when choosing goods and services.
Global consulting company McKinsey &Company released report entitled "The changing face of the African Consumer" in Nairobi this week that showed that merchants of counterfeit and substandard goods may be phased out by consumer preference helping the government agencies phase out counterfeit criminals.


"There is this perception that Africa is a place to dump cheap products on. The consumers are telling us quite clearly that actually they care about quality more than anything else. Price is important but don't come and dump cheap and poor quality goods on us," said Damian Hattingh, an associate at McKinsey &Company.


The report generally indicates there is growing power of African consumer including increase of disposable income that has increased consumer power and preference for sophisticated shopping.
"The African consumer has become wealthier, more mobile, more educated and so is more confidence and enthusiastic," said Hattingh.
A report also indicates that the youth are now the key drivers of consumption and are accelerating change in the retail industry.


"Because of the youth influence, were are likely to see very drastic and faster pace of change in the continent as happened in the use of the mobile phone," Rick de Kock, the Director of Africa Operations at TBWA said in an interview during the launch of the consumer report which was co-authored with TBWA, a branding and advertising company.


The influence of the youth is expected to continue because an estimated 40 percent of the African population being under the age of 14 and is benefiting from transformations being made in telecommunication industry and the sustained resilience of the African economies.


African economies have remained resilient in the face of global economic downturn since 2008, helping to create new class of wealthy population that is driving consumption.
Consumer trends observers present during the launch of the report said in interviews that the growing economies and rise in incomes is seen as the key driver of the retail environment across African cities, building a case of an expanded retail industry across the continent.


Another observation made is that there is a higher number of African in the Diaspora coming back to the continent because of the improving economic fortunes and they are contributing in the raising of consumer awareness.
Closely tied to this is the increase in the number of remittances into Africa, most of which are for immediate use by relatives back homes to buy food, medical services and pay school fees that is also feeding into the retail expansion of the continent.


The McKinsey &Company report identifies Kenya, Ethiopia, South Africa, Nigeria, Egypt, Angola, Morocco, Senegal and Ghana as countries where the retail market is expanding at a faster rate because driven by consumers.
The report notes that growth of Africa's population, expansion of the middle class and rising optimism about the continent's future will play a crucial role in growth of Africa retail industry.
It notes that early entry into African economies provides an opportunity for global businesses to create markets, influence customer preferences, and establish brand loyalty.


"Profit margins in Africa are some of the highest in the world and as more players come into the market the gap will narrow down, " said Hattingh while presenting contents of the report in Nairobi.


The McKinsey research, which began in September 2011, surveyed over 15,000 consumers across 10 countries, concentrating on the cities that are known have a higher per capita spending.


The report focused on groceries, apparel, telecommunications, financial and health services and found that food and beverages offer the biggest opportunities for the consumer market in Africa as well as non-food consumer goods, including apparel.


The report showed a 30 percent of the household wallet goes to groceries, 10 percent goes to clothing, and 6 percent in telecommunications. The report identifies healthcare and banking as the next consumer growth area.

Keywords: Rick De Kock, Africa Roadshow, TBWA\Africa, Nigeria, Kenya

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