of these outlets address specific demands of the consumers within the neighborhood . They stock basic items that are in demand within the locality .
A key role is also breaking the bulk to sizes commensurate to the demand and at a price affordable to the consumers . The bottom of the pyramid in most countries within the continent is still high in proportion to the whole population . For example , according to the World Bank , the poverty headcount ratio is at $ 1.90 a day , the percentage of population stands at 42.7 %. However , if we take the World Bank ’ s measure of $ 3.10 a day , then the proportion increases to 67 % people in Sub Sahara Africa living below that measure . This implies 365 Million or 573 Million people are below poverty line , by respective measures .
However , as incomes improve across the continent , the sizes and varieties of products consumers demand vary . In addition , the role of these outlets is evolving in line with changes in the market . In addition to consumer goods , some of these outlets are taking up areas such as agency services either in banking sector or mobile money services .
Affordability and availability of products within a given location are the factors that are keeping these outlets on the move . In addition , most of the operators of these outlets know their customers , since they operate and live amongst themselves within a given location . This provides an opportunity for customers to pick goods on credit and pay after a given duration – at the end of the day , end of the week or by end of the month .
As incomes , habits and preferences change , there has been a rise of the mini-marts and small supermarkets within the neighborhoods .
Convenience in buying a basket of items from the same premises is a key factor in the rise of these outlets . However , the units of stock have remained relatively small to cater for consumptions within a given location . In some cases , owners have just converted their previous shops to mini-marts to cater for the new shopping habits . However , these outlets have only catered for household items , some categories of food items and consumer goods .
Traditional Markets are mostly the informal channels with all sorts of accessories and products , both new and second hand items within the same location . These traditional outlets are still ingrained in the psyche and shopping habits of consumers across most markets in Africa .
It is no wonder some consumers will buy packed food items like sugar , salt , soap , and flour from a supermarket , but then still pass by the local roadside market to buy vegetables and other groceries .
High traffic to informal second hand markets for clothing could also be due to perceived price differences and range of choices in such outlets . This implies consumers visiting such outlets are seeking functional items .
In this case , fulfilling a function , more than brand preference , is the key factor . This implies , for example , a consumer visiting Kejetia market in Ghana to shop for clothes , will most likely search for items that are fitting , durable and meet his / her expectations .
Supermarkets & Malls
However , the last 10 years have seen the rise of an increasing number of supermarkets and development of a formal retail sector . South Africa is a clear leader in formal retail sector . It has a well-developed retail sector , with the strong supporting factors such as availability of large and well-structured retail spaces , logistics and relatively higher income levels . Estimates show about 60 % of the retail sector in South Africa is formalized . This is the most formalized retail market within the continent .
Developers in other high growth markets in Africa such as Kenya , Ghana , Nigeria , Tunisia are putting into consideration the growth of formal retail spaces . Hence , there is a significant growth of malls and hypermarkets . While still at an infancy stage , this growth is expected to push the development of formal retail sector . Aspirational factors , as well as convenience will continue to bring in a large segment of consumers to the formal markets .
All in all , the shopping habits are at an early stage . Will the malls and other formal channel replace the informal ones ? The informal markets will continue to serve large portions of the population . It will serve the large portion of the market and provide an opportune channel for many consumers across the continent .
The aspirational level , which is a key factor in driving consumers to formal retail outlets is growing , and will continue to be so for a long time . However , this growth will depend on the rise of incomes , as the bottom of the pyramid still remains quite heavy . Hence , the formal and informal markets will continue to thrive side by side across the continent .
The challenge will therefore lie with the marketers in terms of positioning their products and services . It is important to note the informal part does not imply lack of purchasing power . This can be a grave mistake ! Local brands understand this phenomenon pretty well . For instance , local banks have opened branches as well as agencies in most informal markets , and at the same time have branches in most formal
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