Having visited Africa for the third time in the last 12 months, I believe it is relevant for European businesses, including those in Britain. 

There are implications for both the home market and for African territories.

Positives of more immigration

At home, where big-box grocery stores have come under enormous pressure (not least as a result of demographic change and the rise of online), an outlook of more immigration, including from Africa, would favour retailers who offer food diversity on their shelves, adding a much-needed point to the shortening list of reasons to visit a hypermarket.

It may not be the most frequently-heard sentence in the current public debate, but there are actually good reasons for UK hypermarket operators to lobby for more, and controlled, immigration from a number of cultures.

Within Africa, the Sub-Saharan region isn’t really ready for hypermarkets as a mass-market format.

They do work as a format for the upper middle classes, in limited numbers in South Africa and in extremely limited numbers elsewhere in the region.

Reasons for potential

Key reasons for the limited potential include a small lower-middle class with problems on the income side; a supplier landscape that is more suitable for supermarket than for hypermarket expansion (which effectively makes Africa unattractive for most Western grocers); difficulties in the property market; and practical challenges in the cross-border trade of goods.

The big opportunity for British grocery businesses in Africa, therefore, is for FMCG brands supplying into local retail networks.

Partly into modern trade, which continues to be dominated by South Africa groups such as Shoprite, Pick n Pay, the domestic Spar, Woolworths and Massmart.

However, very essentially, the biggest growth opportunity now is selling through the huge independent trade within Africa’s numerous megacities that offer above country average income levels and enormously high population densities.

As well as a 3 million-strong microstore trade that operates according to surprisingly high professional standards, and which is a definite growth segment thanks to benefiting very directly from any social development and associated income increases.

We say: the region is worth a closer look.

  • Boris Planer is chief economist at Planet Retail