Friday, July 19, 2024

Neighborhood tuck shops holding their own against retail giants

Received wisdom is that the profusion of retail supermarket chains has crippled the neighborhood tuck-shop. But that is being refuted by the findings of Nielsen which are quoted in the 2015/16 edition of Rand Merchant Bank’s Where to Invest in Africa report.

According to Nielsen, an American global information and measurement company, the majority of the African population depends on or prefer to shop from informal sidewalk stands or small, local grocery stores.  

“This in itself makes it difficult for formal retailers to penetrate a market effectively and sell to a large number of consumer goods. A good example is the journey of new top-selling products in the Nigerian market. It took six months for the most popular new product to penetrate 65 percent of Nigerian outlets, while the next range of top ten products only reached 30 percent,” the RMB report says.

On a related note, the report notes a slowdown in the growth rate of FDI into retail despite abundant opportunities. It attributes this not to a decline in interest but the struggling global economic environment. A Deloitte study which is quoted in the report says that by 2017, Africa is expected to become the second-largest market for investment by European consumer businesses. “Many retail construction projects are being developed by investment firms and private equity funds eager to cash in on the region’s burgeoning consumer markets. In Deloitte’s view, the consumer opportunity rests on five pillars: the rise of the middle class, exponential population growth, the dominance of youth, rapid urbanization, and fast adoption of digital technologies. All five pillars are still abundantly evident in Africa,” RMB says.

For too long residential districts were the fiefdom of tuckshops but in the past couple of years, retail outlets have been muscling their way in, setting up shop in what are known as local centres. While that has taken away business from tuckshops and forced some of them to close down, the RMB report shows that the latter still have a fighting chance.


Read this week's paper