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Thursday, 06 April 2017 19:14

Shopping Malls Spring up Across Africa as Middle Class Grows

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Soweto residents shoping at the Maponya Mall in Soweto, South Africa, on March 19, 2010. Soweto residents shoping at the Maponya Mall in Soweto, South Africa, on March 19, 2010. (Alexander Joe/AFP/Getty Images)

“We think of ourselves as Wal-Mart’s African investment vehicle,” said Grant Pattison, Massmart’s chief executive. “I think the global economy has got so bad that there’s a realization that with South America, India and Asia tapped . . . there’s only one large billion-sized population left in the world, and that is Africa.” 

So far, it has been South African companies, the continent’s largest and most sophisticated, that have been leading the charge. 

Shoprite, Africa’s biggest retailer, last month announced the opening of its first store in Kinshasa, capital of Congo, a country better known for conflict and crisis than shopping. Shoprite has operations in 17 African countries and about 115 supermarkets outside South Africa. 

Woolworths, a Cape Town-based retailer, has plans to open 14 stores outside its home market this financial year and to almost double its stores across the continent, excluding South Africa, to 104 in the next two to three years. 

John Fraser, who heads Woolworths’ international division, said the expansion has been encouraged by the conscious effort African governments are making to diversify their economies away from dependence on resources. But, he added, “the other thing that’s happening for us is increasing urbanization in Africa . . . and a growing middle class, which is really our target customer.” 

Woolworths has stores in a dozen countries outside South Africa, and its sales outside South Africa have tripled in the past two years, Fraser said. 

Oil-rich countries such as Nigeria, Angola and Ghana are among the markets being targeted. But for all the enthusiasm and potential, the hurdles can be daunting — Africa’s 1 billion people are spread across 54 diverse countries with different cultures, languages and demographics. There are sizeable bureaucratic and logistical barriers, and searching for the requisite real estate can be a big stumbling block. Massmart, for example, has been unable to secure the property it needs to break into Angola and Kenya. 

Massmart opened its first store outside of South Africa in the mid-1990s in Botswana and has operations in 12 countries. It has two stores in Nigeria — deemed the golden goose of the retailing sector — and hopes to open another four in the country. But it could take years reach its targets, primarily because of issues of finding the right property, Pattison said. “It’s very, very difficult. . . . It’s a complicated country, no doubt about that,” he said. 

Still, Pattison said that the harder it is to operate, the “more profit opportunity there is,” and Massmart is planning to open food retail outlets across the continent. “People moving from a rural lifestyle to an urban lifestyle need to be serviced,” he said. “We will now transform Massmart into an African company.” 

Not everyone is convinced. Ademola Olugunde, a 40-year-old electrical engineer who lives in Australia, was shocked by prices at the Ikeja City Mall. 

“This place is a make-believe that everything is well in Nigeria and is not what people need. Step across the road, and you see the poverty; the reality is that it is really tough out there. Fancy malls are for the [wealthiest] 1 percent.” 

But Nigeria’s huge population of 160 million — Lagos alone has more than 11 million — means that still adds up to a lot of potential customers eager to embrace the convenience. “I can’t take my baby to shop in the market, with all the traffic, people and noise,” said Zaynab Salami, 32, who works for the National Blood Transfusion Service and was pushing her trolley with her 10-month-old son sitting inside. “But I can here.”                          Culled from — Financial Times.

 

 

Read 606 times Last modified on Saturday, 08 April 2017 03:36

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