PARIS: Carrefour, the retailer, is expanding its presence in Africa in a bid to take advantage of high economic growth rates and the changing spending habits of the region's burgeoning middle class.
In a joint venture with CFAO, the consumer goods distributor, Carrefour plans to launch stores in eight countries, including Cameroon, Congo, Côte d'Ivoire, the Democratic Republic of the Congo, Gabon, Ghana, Nigeria and Senegal, reported just-food.com.
Joseph Robinson, a lead consultant at the Conlumino research agency, said: "Retailers are slowly coming to acknowledge that factors such as growing middle classes, mobile technology and improving infrastructure are slowly driving the continent to prominence."
Emerging market consultancy Novirost described Nigeria as "the big prize". But Cameroon is also promising, with Euromonitor, the insights provider, forecasting that retail sales will rise from $221.1m last year to $561.1m by 2017.
Nevertheless, there are problems for FMCG companies seeking to break into the African market.
Izaskun Bengoechea, research manager for Euromonitor in Cape Town, noted that the region lacked "strong formal retail organisation", and that while the growing middle class does hold promise, spending remains low by European standards.
Success in Africa is dependent on getting consumers to identify with a company's brand, according to Michael Wood, co-founder and director of Aperio, the consultancy.
Writing on bizcommunity.com, Wood suggested that FMCG groups needed to be sensitive to both regional and local preferences.
He noted that Procter & Gamble, the FMCG group, often reshoots its television ads with local actors, so that while the same script might be used in Nigeria and Kenya, a local identity is maintained.
Appealing to local tastes is also crucial, and Wood cited SAB Miller, the brewer, as an example. It brews different beers for different countries, using maize, sorghum or cassava according to local preferences.
He also counselled careful targeting in the youth market, which is growing and can provide long-term success for a well-marketed brand. However, given the lower spending power of the average consumer, affordability remains a key issue, he said.
Data sourced from justfood.com, bizcommunity.com; additional content by Warc staff