'Table top' retailers challenge traditional distribution channels

While giant

shopping malls are

being developed

in major centres

throughout Africa, the majority

of consumers rely on local

shopkeepers.

“Beyond the well-known

infrastructure constraints,

one of the more overwhelming

challenges is the complexity of

the retail environment,” says

Allen Burch, Nielsen’s head of

Africa.

In his introduction to the

2015 Nielsen “Africa: How to

Navigate the Retail Distribution

Labyrinth”, he says “modern

trade is growing, but it is still

small and underdeveloped

outside South Africa.

“This leaves companies

to figure out how to reach

consumers in the hundreds

of thousands of smaller,

traditional and informal outlets

that account for the majority of

CPG (consumer packaged goods

sales”.

Currently Nielsen tracks

retail sales in 14 sub-Saharan

countries where traditional

grocery stores account for

about 50% of consumer goods

spend – there are over 550 000

of these outlets in the countries

monitored, according to Burch.

“But the most common

shopping channel of all is the

simple table top: a stand set up

on the side of the road or in a

local market to capture passing

trade.

“Eighty percent of consumers

shop from these table tops, of

which there are no less than

200 000 in Nigeria alone,” he

says.

“No wonder then that

companies struggle with the

scope and scale of distribution.

Even companies poised with

the right products for the right

market often fail to get them to

the right place.”

An example is the best-selling

product in Nigeria as tracked

by Nielsen. It reaches 65% of

the estimated 745 000 outlets,

while the next nine best-selling

products are available in just

30% of the outlets.

“Consider the enormous

potential if these products had

only reached more outlets and

consumers,” he says.

Manufacturers and suppliers

wanting to reach customers

need first to understand

the market in each country

or district. In Madagascar,

for example, consumers go

shopping 70 times a month on

average, while in Kenya the

average is 38.

Further analysis is needed

to identify the most profitable

outlets. Lagos has 100 000

outlets where laundry detergent

is sold, but some 80% of the

sales value comes from 35 000

of these outlets, and a full 50%

“from a more manageable

10 000”.

The information on African

consumer behaviour being

gathered by Nielsen will help

companies serving the market

to optimise their logistics

chains.

Logistics companies should

not lose sight of the traditional

market mechanisms: “It is

true that large African and

international retailers such

as Shoprite, Woolworths,

and Carrefour are making

investments in modern trade

formats. But traditional outlets

will continue to be a significant

channel for reaching consumers

for some considerable time to

come,” says the report.

Value-added logistics

opportunities include the

repackaging and branding of

products into single servings or

smaller sizes.

CAPTION

Informal shops such as this in down-town

Beira remain the main distribution channel for

consumer goods.