Study: Africa set to become next retail hot spot
Global retailers and investors looking for opportunities in emerging markets should look to China, India, and Malaysia. But another market also demands attention.
According to Kearney’s annual Global Retail Development Index (GRDI), as growth in Asia slows, Africa is emerging as the next big retail hot spot. The continent has the fastest-growing and youngest population in the world.
“Africa is poised to move away from traditional retail models and become the fastest-growing, richest, and most sophisticated market in the world,” stated the report. “Africa’s aggregate potential as an emerging retail market far outweighs problems associated with investing in what can still be risky and challenging individual nation-state economies.”
China, India, and Malaysia took the top spots in the GRDI, followed by Malaysia and Indonesia. (See list of top 20 countries at end of article.) The study ranks 35 emerging countries based on a set of 26 factors that include four key variables — country risk, market attractiveness, market saturation and sales growth — to determine the markets that are growing, attractive and relatively risk free.
Kearney cited a number of factors driving Africa’s market potential, including the explosive growth of young, urban, and digitally savvy consumers, increasing mobile phone penetration, and the creation of digital payment and shopping networks. It also cited favorable governmental regulations and spending initiatives, and significant investment by both foreign and domestic companies.
“Together, these forces are transforming the face of African retailing and providing a blueprint for the development of other emerging markets,” the report stated.
By 2050 the global population is expected to increase by 2 billion, and Africa will be home to the majority of these new lives, according to the report. African nations such as Ethiopia, Ghana, Cote d'Ivoire, Rwanda, Kenya, Senegal, and Morocco are expected to grow faster than the regional growth and world average.
“This year's GRDI report illustrates how much, and how fast, markets can change and the critical role consumers play in driving that change," said Greg Portell, global lead in Kearney's consumer practice. "What we see in Africa, for example, are multiple examples of modern retailing, underpinned by digital technologies and cooperative governmental policies, leapfrogging traditional models in response to the opportunities created by dramatic population increases, escalating urbanization, and the emergence of an expanding middle class."
Here are the top 20 countries (with their final scores) in the 2021 Global Retail Development Index.
1/China…72.8
2/India…64.4
3/Malaysia…54.3
4/Indonesia…53.0
5/Bangladesh…53.0.
6/Morocco..52.2
7/Egypt..52.0
8/Ghana..51.9
9/Vietnam…51.8
10.Domincan Republic…51.4
11/Serbia…50.8
12/Saudi Arabia…50.6
13/Kazakhstan..50.2
14/United Arab Emirates..50.0
15/Russia…49.3
16/Code d’Ivorie…49.0
17/Jordan..49.0
18/Senegal…48.3
19/Bulgaria..48.3
20/Azerbaijan…47.5
To access the full report, click here.