Most investors and businesses know the potential of Africa. It is the World’s second-fastest-growing region, after Asia. Over the years Africa’s growth has been fueled by its rich resources. Surprisingly, it being the World’s second-fastest-growing economies is due to its rising consumer market.
When the single-largest business opportunity is well represented in Africa, then it is postulated that the consumer-facing industry will have a growth of more than $380 billion by 2020. Many companies face different challenges of turning this potential into action mainly due to the depth of market research. However, over the years a great change has been noticed. McKinsey, Africa’s consumer insight center, made a survey one of its kind that turned the angle by which everything was observed. Focusing on the largest cities in Africa, they surveyed over 13,000 consumers in ten African countries. Different consumption categories were covered while conducting the research, and they are: apparel, financial services, telecommunication, the internet and groceries.
The new African Urban consumers aren’t just consuming! There are several factors that keep them in shape. Africa has the youngest and fastest growing population in the world. They are the new consumers in the continent that have better education, smaller families, higher earning and to crown it all they are digitally savvied. They are focused and optimistic about their economic growth: having 84 percent of the population say they will be well off in two years’ time.
Just like their counterparts in any part of the world, the new African urban consumers are both brand and quality-aware of the product they purchase, watch the budget while looking out for the latest trends, are in dire need of a modern and attractive shopping environment.
Africa is a little different and complex in this case has it has a gradation market of 53 countries and more than 2,000 languages spoken on the continent. From East, West, North and South, consumers have their own unique preferences and need very different from the other.
To reach the ever-growing new African urban consumers the McKinsey study attempts to provide the existing companies without any disputes or judging whether new or expanding existing footprints in the continent. With the insights provided by McKinsey, they need to come up with a unique, winning business model to reach the new consuming class. The research highlights to the realization of this goal are:
• FOCUS WHERE IT MATTERS
Cities are believed to offer the best opportunity: African cities remain forecast to contribute nearly 40 percent of GDP growth. But companies may be wise to bypass high-profile megacities, such as Cairo, Johannesburg, and Lagos, for midtier cities, like Abidjan and Rabat, which are more accessible, have less competition and offer better profit margins.
• DEVELOP LOCALLY RELEVANT, QUALITY PRODUCTS
Companies can be in a better position to customize products to the local market if they have a full understanding of what quality means to the new urban consumers, their preferences, lifestyles and their daily needs.
• HIT THE RIGHT PRICE POINT
Affordability is critical when it comes to production. Therefore, companies have to be engineered to hit a specific price point in order to sell well to the new urban African consumers. The companies can offer lower cost variations, smaller sizes of the products or use alternative payment models in order to achieve their end goal.