Empowering African Businesses

Nielsen debunking retail myths, consumer behavior in East Africa

0 539

- Advertisement -

Nielsen has hosted two milestone market intelligence events in Nairobi, Kenya on 20 March and Kampala, Uganda today, aimed at helping delegates understand the ‘Changing nature of Markets and Consumers in East Africa and the resulting requirement for changing strategies in the wake of this flux.

The conference included insight sessions on the evolving retail and consumer landscape in Uganda and East Africa, along with discussions on the key trends shaping the future of the country and what marketers can do stay ahead of the curve.

Speaking at the Uganda event Nielsen Managing Director for East & South Africa, Bryan Sun stated that all markets are facing increasing pressures, but it seems that one of the biggest myths is that emerging markets like Uganda have “run their course”.

He stressed that contrary to this view, several population attributes reinforce the positive prospects for retail growth in emerging markets, namely a growing and younger population, increasing urbanization, and a growing middle class, which will likely be the growth engines for consumption.

He also debunked the myth around ‘Promotions’ being the only way to drive sales.  Sun stated; “Promotions have become over-used in many developed markets to drive short term sales growth as large stores struggle to find like for like sales growth. As a result promotions have become less efficient as retailers promote products too frequently. The reality is, however, that promotions are not the only weapon; fresh food, a range of quality products, convenience and availability, all play a role in driving sales and shopper loyalty. One needs to be smarter about promotions vis-à-vis other drivers of sales and find the right balance”

 

Bigger is not Always Better

Another myth that was brought to light is that Bigger Stores are Better. In terms of key trends in retail, Sun said “Today, in the world of retail, it’s all about the growth of small format stores. Why? Key demographic changes such as more working women, smaller households, increasing urbanisation, the impact of traffic congestion and lack of proper infrastructure, are all adding up to change the way people live their lives and how they shop. We are seeing an increase in frequency of shopping as people meet more needs at smaller, more convenient outlets, as well as more people looking for food on the go to fit their hectic lifestyles.”

Another myth is that when it comes to retail eCommerce won’t be important for grocery products due to the profitability challenge. Contrary to the common misperception Sun said that in a number of markets, including the less developed markets, we are already seeing e-commerce having a significant impact on grocery. In markets like Korea, nearly 1 in 5 dollars spent on groceries is online. As retailers, and manufacturers, overcome key challenges such as payment, trust, and last mile delivery we will see consumers increasingly embracing online purchasing, particularly as they become more connected through smartphones.

Looking ahead, Sun said “The most successful players will give shoppers a reason to choose them over their competitors, and it won’t be about price alone. To stand out, retailers must create unique, right-sized experiences that feel personal and match the diverse needs of local communities and key consumer groups.”

- Advertisement -

Understanding the East African consumer

In the second session, Akash Pal, Managing Director, Consumer Insights, Nielsen Africa & Middle East showcased key highlights about the East African consumer and the diversity within the region. One of the recent consumer studies by Nielsen found that each country is different and has distinct consumer behavior and attitudes – Ugandans were found to be more “experimental”, whereas Kenyans were more “inquisitive”. Pal said this was key as it would assist with tapping into the country’s consumer mindset and delivering to their unique needs.

 

When it comes to finances, we find there’s a high incidence of savings in East Africa but the quantum of savings are significantly lower than those seen in other similar economies. Savings are largely driven by the need to own land, build houses, and even to establish or expand business. Attitude towards spending was also distinct across markets, Kenyans are more “rational” towards savings and expenditure while Tanzanian are more “bargain seekers” and Ugandans are “the savvy” consumers.

 

Food comes first

When looking at East African household expenditure, 30% expenditure currently goes towards food and groceries. Looking specifically at Uganda, it is interesting to note that Tea, Yogurt, and Body Care Products are some of the new entrants in the ‘Top 5 products purchased in the last 30-days’ category.

 

To conclude, Pal looked at Technology and Digital adoption in the region, which will play an extremely important role in spurring economic growth and commercial activity. However, at present there is a lag in adopting new technology when compared with similar economies outside the region.

621 total views, 0 views today

- Advertisement -

Comments
Loading...
Social Media Auto Publish Powered By : XYZScripts.com