When you are starting a business in Africa it is very important that you understand your consumers. Right now, Africa has the world’s fastest growing middle class with an increased spending power and when you produce or directly sell products to a consumer market you need to be aware of these powerful developments. While preferences, buying habits, spending power, and values of the ‘African consumer’ vary significantly, there are some macro trends we can witness across the continent. Being aware of those trends will help you make more informed and strategic business decisions with your start-up.
So, what are these new trends among African consumers? Let’s have a look:
1. They are brand aware
African consumers are not only brand aware, they are also increasingly prepared to spend more money for a known and respected brand. Overall, there is still a great preference towards foreign brands for items such as clothing, cosmetics, electronics, or food. In fact, several entrepreneurs have reported that consumers would choose a foreign brand over a local brand, even if the local product was as good or even better in quality. A fresh juice maker in the DRC for example explained that this was one of the biggest obstacles for her when getting started and she had to diversify her juice business selling snacks in order to make enough profit. Other African entrepreneurs are targeting the US market with their clothing or cosmetics brands, because they believe if they find a market in the US, locals will start to respect the brand more. Having said that, an increasing number of African brands are successfully breaking through, and many African entrepreneurs who have started with nothing much in hand have continued to build strong made-in-Africa brands with products flying off the shelves.
Conclusion for you: Be aware that your product’s brand image is more important than you may think and it is crucial that you invest your time and money into getting your brand development right and not leave that for later.
2. They adopt Western buying habits
African consumers are adopting increasingly Western tastes and buying habits, especially when it comes to technology, clothing and food. A lot of that is based on more convenience, think for example about breakfast cereals (so mums do not need to cook in the morning), food home deliveries or fast food, baby formula, juice boxes, buying through online platforms or special apps. And although most Africans are very attached to their traditional cuisine, they do like mixing that with Western products and tastes and there is a huge increase in typical Western food products such as pizzas, chicken & chips, peanut butter, jam, cookies etc.
Conclusion for you: In my view this presents a huge opportunity for Africans in the Diaspora who are exposed to Western foods and tastes. Walk through your local supermarket in the West, look at some of the popular foods on the shelves and think of the opportunity of producing that locally in one of Africa’s dynamic markets.
3. They buy increasingly online
Several analysts and writers are stressing on the bottlenecks of running an online business in Africa – the lack of infrastructure and payment systems, for example – and while they exist, the trend clearly shows a very significant increase in online shopping in certain economies such as Nigeria, Kenya, Morocco, South Africa, Uganda, and lately Tanzania.
Conclusion for you: I believe that it is only a matter of time that the right solutions for some of the challenges of running an online business will show up, and by positioning yourself now, you will have a great head start when online shopping really takes off. And it will.
4. They value customer service
Frankly, customer service is not made in Africa. The whole concept is still completely alien to some local companies, even if they are larger in size. But here comes the interesting part: African consumers value good customer service! So much so, that it has been reported that the success of certain companies, such as ifix or Yuppiechef was partly due to their outstanding customer service – it was so rare that consumers kept coming back!
Conclusion for you: You probably have heard that it is very important to not just offer a great product but also to stand out and set yourself apart from the competition. In Africa, providing excellent customer service is a great strategy to grow your business faster!
5. They look increasingly for good quality
There is this huge perception hanging over Africa that cheaper is better. This is only partly true. Yes, the largest part of Africa’s consumer base has little spending power even in the newly emerging middle class, which means that there is a huge demand for affordable items of all sorts. But there is another more affluent segment of consumers, who are actively looking for good quality and who are prepared to pay for it. This surely includes certain luxury products, but it is more than that: A growing number of consumers in high growth markets care about their health, the environment, or ethical standards and it sells! Organic baby care products for example, organic food (some larger hotel chains are great buyers in this regard, too), or recycled shopping bags you could produce (largely driven forward by local environmental policies). You simply have more and more people who gladly ditch the cheap Chinese products for qualitative local brands.
Conclusion for you: African consumers who have more spending power don’t just buy more, they also make decisions based on quality, and it is important that you put enough emphasis on the sourcing of your material, product design, and the finishing if you want to appeal to a more affluent mass market. Yes, it will cost you more to produce your product, but you can sell at a much higher price point and that can lead to very healthy profit margins.
Dr. Harnet Bokrezion is the co-author of the book 101 Ways to Make Money in Africa. She coaches individuals and consults existing companies assisting them to make smart and strategic business decisions in Africa’s new emerging markets. Dr. Harnet also regularly writes for the renowned DHL powered publication howwemadeitinafrica.com. Get in touch to inquire how she can be of assistance to your own Africa business endeavors: harnet@africajumpstart.com. Or simply follow her on Twitter @africajumpstart.com
