By Damian Hattingh, Bill Russo, Ade Sun-Basorun and Arend Van Wamelen
The world is catching on to the potential of the surging African consumer market. Here is how to get ahead of the competition.
Africa’s consumer-facing industries are expected to grow by more than $400 billion by 2020. That would account for more than half the total revenue increase that all businesses are expected to generate in Africa by the end of the decade. The world has caught on to the potential of this surging consumer market. But many companies, particularly those new to the continent, have little idea how to translate the opportunity into action. It’s not their fault—there has been a lack of research about African consumers’ attitudes, behavior, and needs historically. But that’s changing: in one of the first studies of its kind, the McKinsey Africa Consumer Insights Center surveyed 13,000 consumers in ten countries in 2011 and 2012, concentrating on the largest African cities.
We focused on five categories of household consumption: apparel, financial services, grocery, the Internet, and telecommunications. The survey generated a range of insights, including these findings:
- Africans are exceptionally optimistic about their economic future; 84 percent say they will be better off in two years.
- Internet use is far greater than anticipated—more than 50 percent of urban Africans say they have accessed the Internet in the last four weeks, on par with reported usage in Brazil and China.
- African consumers demand quality products and are brand conscious, belying the view that the continent is a backwater where companies can sell second-rate merchandise.
- African consumers want the latest fashions and a modern shopping experience.
Our research has broad implications for consumer-facing companies considering entering or expanding their presence in Africa. For one, they should concentrate on the countries and cities with the most promising markets. In addition, innovative product and business-model strategies are required to meet the needs of highly value-conscious consumers. To ensure successful execution, companies must address distribution challenges, invest in consumer research since data are scarce, and find and retain as many talented Africans as they can. And their approach to marketing should take into account the new reality of the digital consumer.
To read the rest of this comprehensive 20-page report, download “The rise of the African consumer” (PDF–1.06 MB).
Read the related McKinsey interview: “The opportunity is vast”