With Sub-Saharan African brimming with potential being one of the few markets with annual GDP growth of more than 5%. AT Kearney’s 2015 African Retail Development Index (ARDI) reconfirms the potential of many nations throughout Africa—not just oft-discussed markets like Nigeria and Ghana, but also small, dynamic markets such as Gabon, the ARDI’s top-ranked market and home to Sub-Saharan Africa’s highest GDP per capita, and also mid-sized and fast-growing countries such as third-ranked Angola.
The report begins with a look at entry strategies for Sub-Saharan Africa, followed by an in-depth analysis of the top 14 countries.
The 2015 ARDI ranks the top 15 Africa countries according to market attractiveness for retail expansion. The ARDI is a useful framework for retailers because it not only identifies the markets in Africa most attractive for retail expansion today, but those that offer the most potential.
The Index identifies three distinct differences in stages of retail advancement in the Top 15 countries—basic, developing, and mature—with only Southern Africa falling into the mature bracket. They are characterized by having a formal shopping culture, international and growing private label exposure, innovation, and stable and transparent pricing. In this market, the key purchase drivers are convenience and quality.
Mirko Warschun, AT Kearney partner and leader of the firm’s consumer industries and retail practice for Europe, Middle East, and Africa (http://www.atkearney.com), noted that Nigeria (#4) moved down the index, despite its market size and room for growth. “Nigeria has massive room for growth in formal retail with 25 new shopping centres in development,” said Warschun. “True spending, however, remains comparatively low as the ‘true middle class’ is a lot smaller relative to the smaller countries ranked higher.”
With its tremendous potential and strong economic projections, however, Nigeria is still a market to consider.
While Tanzania (#5) has dropped a notch, it was the largest and most stable of the East African Community countries and remained an attractive retail market said Warschun. “Tanzania is in the early stages of development, and therein lies the opportunity,” he said. “This unsaturated market has one of Africa’s fastest growing retail sectors, boosted by new shopping malls.”