Pi Attitude Zone: Material Status

Changing Shopping Habits in African Supermarkets

South Africa’s grocery retail business has not only been growing in South Africa itself.  It has been making significant strides in other parts of the African continent as well.

SA’s Shoprite store chain first ventured outside its own territory in 1995, starting up a store in Lusaka, the capital of Zambia.  Now it owns two, the second being a rather more ritzy shopping center which opened its doors in 2011.  Shoprite’s new tenants include Pick n Pay and Woolworths, both newcomers to Zambia.  Other retailers have followed.

Why Zambia?  Well, the local economy has turned from bad to good with the growing Chinese interest in buying the output of the country’s copper mines.  Zambia has set the pace for other African growth markets.  Six of the ten fastest-growing economies worldwide in the last decade turn out to be in Africa.  Yet rich-world retailing is still a relative novelty, with tiny local outlets and informal local markets still accounting for the preponderance of all sales to consumers.  Even in comparatively sophisticated Nigeria, the top six retail companies only account for 2% of all goods sold.  Now a new African appetite for malls, shopping centers and supermarket chains is taking off. 

South African outfits like Shoprite are well-placed to take advantage of the trend, and they have been pouring investment money into countries scattered across the continent.  It seems to be paying them handsomely, with business growth in foreign markets already three times the company’s growth in the domestic market.  Shoprite is building around fifty new stores, concentrating first on two comparatively big markets, Nigeria and Angola. 

The stores sell everything from basic goods to French champagne (a particularly brisk seller in Lagos, Nigeria’s biggest city).  In a country like Zambia, sales are dominated by staple goods like meat, cereal products, vegetables and sodas.  Affluence levels among average shoppers are still not high, and growing a retail business often means sticking to the basics.  As a result, stores from the same chain will carry only a limited range of goods in Zambia’s industrial copper-producing area, but four times as many in bustling, cosmopolitan Lusaka. Among the biggest-selling items in the capital’s Pick n Pay outlet are Swiss chocolate bars and 25-kilogram sacks of maize, a strange combination.

Growth is set to continue, and now international giants like Walmart are waking up to the African opportunity.  They recently bought a majority shareholding in local retailer Massmart.  French retail behemoth Carrefour has started up joint ventures across the continent.  How westernized will shoppers across Africa become, and how soon?

Zone: Material Status Country: Middle East / Africa Product – Retail