AFRICA – Movement restrictions of both goods and people triggered by the COVID-19 pandemic has led to an increased focus on local production and consumption, as massive supply shortages were experienced during 2020.
This is also spearheaded by government legislation aimed at local economic stimulus, coupled with the increased cost of imported goods, indicates Euromonitor International, a market research provider.
Initiatives such as the government-funded Proudly South African campaign has started to showcase locally-manufactured products on a dedicated website benefiting small scale manufacturers in particular.
In West Africa, the government of Ghana is in the front-line championing investment in the manufacturing industry through its flagship project dubbed One-District-One-Factory (IDIF), focusing on undertaking both Greenfield and Brownfield projects.
Through building the capacity of locally produced goods, manufacturers and retailers avail a wide range of innovative products, giving them an opportunity to capitalise on changing consumer habits and needs.
Demand for essential products increase
Further to that, there is a renewed focus on essential products as consumers seek value for money on the back of reduced disposable income.
According to Euromonitor, disposable income decreased across the region in 2020, with South Africa experiencing the most dramatic decrease of 7%.
However, consumers’ disposable income is expected to regain its growth trajectory by the end of 2021.
Staple foods such as rice in Nigeria, maize meal in South Africa and Kenya, and cooking oils will continue to be popular, essential food choices, at the expense of indulgences such as snacks.
For instance, in Nigeria, rice grew by 13% in value terms during 2020.
One way to ensure other products are also in demand is through offering price promotions and value deals to cash-strapped consumers.
In South Africa for instance, Pick n Pay is offering Nestlé’s Maggi 2-Minute Noodles Mega 5 Pack, already a value offer, in a two for one deal.
Moreover, by expanding the range of pack sizes on offer, a larger consumer segment can be reached. For example, Quaker Oats launched a smaller pack size of its Instant Oatmeal in flexible packaging with success in Nigeria.
E-commerce to continue growing
The mode of availing products for reach by consumers also matters as retailing sales in Nigeria and South Africa shrunk by 18% in 2020, while retail sales in Kenya declined by 7%.
This fast-tracked existing strong e-commerce growth, with many companies expanding their reach. For example, Woollies Dash, a mobile app-based, same-day delivery service was launched by Woolworths in South Africa.
E-commerce is expected to continue its strong growth trajectory, registering double-digit growth over the long term.
Growth is most evident in South Africa, reaching more than 40% in 2020. E-commerce is heavily supported by m-commerce; in a region where mobile phones are the primary means of internet connectivity, the channel will be critical in any marketing mix.
However, consumers will continue to buy from traditional channels such as open markets as they meet consumer’s need for value, convenience, and proximity.
This is especially true for low-income consumers, who typically buy small quantities of goods at a time.
Retailing sales in Sub-Saharan Africa are expected to grow by 7% in 2021. However, Kenya and Nigeria’s respective retailing industries will recover the fastest, exceeding their 2019 market sizes by 2022.
While, South Africa’s retail industry will only return to its former value size by 2025.
Within this context, consumers will continue to seek value for money while they embrace omnichannel shopping driven by e-commerce.
Due to the pandemic, GDP fell by an average of 2.8% across the region in 2020. However, the rollout of vaccines is expected to lead to an upturn in economic recovery in 2021, with real GDP growth of 3% projected for Sub-Saharan Africa.
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