The importance of consumer research in Africa
Africa is the new frontier for growth, offering good opportunities for brands across all industries. A number of local retail brands, in particular, are enjoying a growth spurt beyond South Africa’s borders.
However, with great potential comes risk, which is why brands looking to grow market share into on the rest of the continent need to carry out effective consumer research.
“African consumer research is about understanding the nuances of regional and cultural differences within major cities,” points out Gareth Pearson, CEO of consumer and industrial retail research firm BMi Research. “Within this, the greatest opportunities are around identifying the key urban areas which hold significant consumer buying power, and understanding consumption and purchasing behaviour in these mega metro cities in order to provide brands with insights around developing a route to market strategies and reaching additional consumers.”
A scarcity of credible market research in Africa, Pearson explains, means that brands that have the budget to conduct market research lead the way, while brands with less budget and intent, adopt a follow strategy have to follow. A major challenge, therefore, is the relative lack of budget available to conduct unique and specialised market research. M - multinational brand owners conduct innovative market research at a regional hub level. But when it comes to African markets, he reveals, they carry out relatively unsophisticated market research, usually concerned only with compliance.
Effective consumer research, adds Shawn Henning, BMi Research’s analytics director, needs to be on the ground to see first-hand how consumers shop, how they use products and services, and how they connect with local and imported brands. These insights can then be used to inform growth strategies around the performance of specific markets within the African context, the size and nature of these markets, and the best channels for product distribution. “The days of ‘hit and hope’ are gone; in this competitive environment, a targeted approach based on sound local knowledge is needed,” Henning comments.
The current retail landscape on the continent, according to Pearson, indicates that modern trade or formal retail holds a relatively small share of the total market, but rapid growth is predicted where large retailers are growing store footprints.
South African retailers like Shoprite, Spar, Pick n Pay and Woolworths, for instance, have been working their way across Africa, opening new stores, with other African retailers following suit. This expansion, maintains Henning, has changed the way African consumers shop and engage with brands. It marks – marking a distinct change in purchase behaviour as consumers gradually move away from markets where they have historically shopped to supermarkets where they can now buy everything they need.
Identifying the opportunities that these trends present is where the value lies for brands, and would not be possible without quality on-the-ground research. “Consumer research offers brand owners the insight required to align with these trends and dynamics and establish a foothold in Africa,” Pearson concludes.
Big take-out: Consumer research is helping businesses expanding into Africa to understand local nuances and mitigate risks and costs as they expand into Africa.