There is strategic benefit in having access to detailed retail census data for African countries. Having this information in a geospatial format also adds significant value. This information is collected for strategic benefit to clients but also because of the passion that we have for Africa's development.
Africa is a remarkably diverse continent with over 1.3 billion people living on it with around 50% living in urban areas. There are 54 countries that are split into five economic regions with 1500 to 2000 languages being spoken by more than 3000 different cultural groups in Africa.
The informal market is where it all happens in Africa with only 1-2% being in the modern market, which still contributes a significant amount to the value & volume in the retail sector. When collecting data on the retail market in African countries requires one to observe & understand the market. Key factors to understand in the retail market in Africa is:
- density of outlets and their proximity to one another
- the mode of transport and volume of it
- the condition of the roads and infrastructure
- the innovation and mindset of African market
Retail census data give effective insight to penetrate African markets
This information gives one effective insight to increase penetration of the market both vertically and horizontally.
It is believed that data can be accessed from various sources within African country, but the reality is that retail data is often not granular enough, it is outdated and in many instances inaccurate, which could cause significant problems to businesses. What is probably the biggest problem is that this information cannot be mapped as it does not contain geographic coordinates.
A retail census or Every Dealer Survey (EDS) or walk the streets survey as it is also known, is primarily to understand the market size. Other key benefits of the retail census include quantifying the universe in a particular retail sector, tracking the share and distribution in the market, developing a route to market strategy, and identifying new retail outlets to target. The retail census data is also used to monitor the implementation of a brands retail strategy to see that it is working effectively.
Doing a retail census requires one to identify the correct questions, so that one gets the right answers. The questions that are asked cover aspects such as profiling the outlet, understanding its trade environment and who the customers are, how it operates, what are the opportunities and threats as well as what level of competition exists. One can then map and visualize the information to see where and how to get to particular markets. The data gives one the big picture and allows one to optimize a brands distribution and sales territories, target particular customers and use the data as a sampling frame in the conducting of retail audits and retail share research.
Retail census data available for 16 African countries
Frontline Market Research has done retail censuses in 16 African countries, which continue to be updated and new countries are continually being added. The retail census data provides critical data needed to define where to play, how to win and how to keep winning. In more simple terms, it allows companies to identifying the right place for products, at the right time and the right price. The retail census data provides significant amounts of information that should be integrated and used by all departments within any company. This is because this data is an asset to the company and needs to be used to ensure the greatest return on investment.
Although retail data can be trended over several years after a census has been completed, it should be repeated every 3-4 years. A retail census involves walking every street to identify and collect data on all retail outlets. This is done using innovative technologies to collect the data, visualize it and develop route to market plans. The retail census data can also be segmented, and trade channels identified. This data turns insights into action and this is where the value lies. Having access to the data allows the brand to do a review of their retail coverage, develop credit strategies, identify opportunities, align their portfolios and maximize their investment strategies.
Looking at Kenya as a case study, 38 000 retail outlets were identified that occurred within 15 trade channels. The retail data can be overlaid with other geospatial data to understand the market more fully. One can overlay the retail data with different administrative levels and aggregate attributes associated with the retail outlets to the administrative levels. The overlaying of distribution centers with retail outlets gives one an indication of which ones should be served by a distribution centre.
Retail data in a geospatial format allows “heat maps” to be produced that show the concentration of retail outlets in any particular area. Areas where they are good opportunities for new business can be identified and route to market plans developed to incorporate new outlets into the distribution strategies of a company. This provides the necessary information to identify the resources required to service the retail market over a particular time period and at what cost. What is critically important, is to ensure that the geographic coordinates of the retail outlets are accurate.
When looking at the route to market in African countries, there are many workstreams and distribution channels. Direct distribution channels mainly deal with the modern trade and incorporates distribution centers, regional warehouses and sales vans. The indirect distribution channel is mainly to traditional trade and includes sub distributors and specialist wholesalers. The combination of direct and indirect distribution channels forms what is known as a hybrid channel, which is what one sees in reality in most African countries. The important of the retail census is that it allows more control over hybrid distribution channels by mapping every touch point and ensuring that supply, demand and logistics are harmonized with one another.
5 key messages in building retail markets in Africa
There are five key messages that can be taken from this presentation:
- Know everything you can about your market - what are the opportunities, what are the risks and what level of effort will be required to enter the market,
- Use the most accurate and comprehensive data to understand the market,
- Design the survey methodology and processes with the end result in mind,
- Target and understand your end customer to win,
- When conducting retail censuses in African countries, be nimble and inflexible.
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Steve is a seasoned researcher – he is the go-to man when it comes to doing retail censuses and other research methodologies in Africa. He is a director and co-owner for the Frontline Research Group (FRG) specializing in commercial and development research in emerging markets. Steve is widely-travelled and well networked with international corporates and funding agencies. He is responsible for building a set of diverse client and research portfolios for emerging markets– with a core strategy offering accurate and actionable insights for clients in a sustainable way