With more than 1.1 billion projected consumers by 2020, BCG is predicting that Africa at that time will have twice as many affluent customers as the U.K.
That’s according to a survey of 11,127 consumers across 11 African countries. The survey results are in Boston Consulting Group’s report, “African Consumer Sentiment 2016: The Promise of New Markets.” The countries in the survey include: Algeria; Angola; Côte d’Ivoire; the Democratic Republic of the Congo; Egypt; Ethiopia; Ghana; Kenya; Morocco; Nigeria and South Africa. Consumers were asked about attitudes, budgeting and spending behaviors. BCG also looked at where consumers shopped, as well as tracked the effect of income levels on the purchase of specific products.
BCG found that 88 percent of African consumers are optimistic about the future. Optimism, the report concluded, fuels the desire to buy, which in turn helps drive the economy forward. In the major consumer markets of Egypt, Kenya and Nigeria, optimism is above 90 percent. These consumers, the report found, are eager to buy new things, and derive high levels of happiness from their purchases.
But while many African consumers highly value global brands, they are also more open to brands that have new products targeting the African market. Social approval of a brand has an increasingly strong influence on purchasing decisions. Further, generational differences also reflect varying shopping preferences. More respondents said now than they did in 2013 that they don’t want the same brands their parents buy, and brands also seem less important than they once were as a reflection of self-identity. The report said the share of respondents who said “Brands say something about who I am” dropped to 56 percent from 67 percent in 2013. And while Nokia and Samsung are Africa’s favorite mobile electronic brands, in apparel, accessories and footwear, brands are less influential.
While the report said that growing consumer markets offer potential to multinational corporations seeking opportunities in emerging locales, it also noted the differences in consumer preferences and behaviors of the continent’s varied populations.
Consumers in Egypt and Morocco have the highest levels of financial security, and they are more inclined to buy luxury items such as beauty products, appliances, electronics and apparel. In contrast, South African and Angolan consumers, at 39 percent and 34 percent, respectively, are more inclined to visit modern retail stores than their counterparts in other African countries.
BCG also found that for African consumers, quality and durability is more important than price when they choose to buy in certain categories, such as home electronics and automobiles.
And while incomes are growing, the one hiccup is connectivity. Internet access is now more readily available, but power outages and slower connection speeds hinder online and mobile access.
BCG cited Ethiopia and rural consumers as the two markets that have the most growth potential. Ethiopia because of the country’s economic strength, and rural consumers because most companies focus on the continent’s urban populations.
“To make inroads, companies will have to target those segments with the greatest potential, rethink how they market, and distribute their products and created tailored solutions,” the report concluded.