Small stores and open markets account for 97% of retail sales – Report
More than 600,000 small shops and open-air markets dominate the retail landscape in Nigeria, accounting for 97% of national sales of food, beverages and personal care products.
This was in a report published by the Boston Consulting Group (BCG).
The report says that despite the many daunting challenges facing traditional retail in Africa, including the expansion of modern retail, the nascent rise of e-commerce and changes in consumer behavior that have been accelerated by the COVID-19 pandemic.
The report notes that “The Future of Traditional Retail in Africa” revealed that despite the advance of supermarkets, convenience stores and other modern formats, African consumers on average continue to purchase more than 70% of their food, beverages and personal products. skincare products from more than 2.5 million small independent boutiques on the continent.
In BCG’s study of over 4,500 small retailers in five of Africa’s largest markets: Egypt, Kenya, Morocco, Nigeria and South Africa, it became clear that the traditional retail will remain at the heart of African commerce in all but a handful of countries, such as South Africa, and that there is strong momentum for change in the traditional retail experience.
BCG Nigeria Managing Partner and co-author of the report, Stefano Niavas, said: “The desire of traditional retailers to diversify and adopt digital solutions, coupled with growing investor interest in providing digital solutions , shows that they will find opportunities to grow and remain the cornerstones of African economies in the future.
The report notes that modern retail remains highly fragmented and is led by international hypermarket brands, indicating that modern chains are struggling to grow due to currency devaluation, underdeveloped transport infrastructure and inefficient facilities, poor logistical capabilities, inadequate power supply and other complex challenges.
Niavas added that, “Based on our analysis, many small retailers are already aware of the changing retail landscape and are ready to improve their business premises, product quality and expand into across the country”.
According to the report, based on current trends, the modern retail sector in Nigeria, even if growing rapidly, is likely to remain small and perhaps account for no more than 5% of Nigeria’s retail sales. here 2030.
He also noted that given the central role that brick-and-mortar stores will continue to play in Africa’s retail landscape, there will be a number of opportunities for various players in the ecosystem as the environment is changing, arguing that investment funds can find opportunities to provide capital and management. an expertise that will allow modern local distribution chains to develop in new cities.
“An active start-up ecosystem wants to provide digital solutions that will strengthen the role of traditional retail in Africa and allow the sector to become the interface of commerce across the continent.
“Digital solutions can help consumer food manufacturers improve their control over go-to-market strategies and provide data to better understand retailers. Banks and telecom providers can drive growth by developing new business models and offerings tailored to the needs of traditional retailers,” he said.
Boston Consulting Group partners with leaders in business and society to address their biggest challenges and seize their biggest opportunities. BCG pioneered business strategy when it was founded in 1963.
