- Economic strength, middle classes to attract foreign chains
- First priority in most Africa countries is basics, dry goods
Gabon is the most attractive sub-Saharan African country for international retailers to target due to strong economic growth and a stable middle class, according to A.T. Kearney’s African Retail Development Index.
The study, which evaluated 48 countries in the region, ranked Gabon ahead of Botswana, Angola and Nigeria, Africa’s biggest economy and most populous country. The index, published by the U.S. consultancy on Tuesday, is compiled based on factors including the size of the urban population, business efficiency and risk of investment.
“Scale will come to sub-Saharan Africa only when a few things happen, particularly the development of a shopping culture,” A.T. Kearney consultants including Mike Moriarty and Jaco Prinsloo said in the report. “The first priority in most markets is for basics and dry goods, but over time fresh supply chains and modern shopping space will be increasingly needed.”
South African retailers including Shoprite Holdings Ltd., Woolworths Holdings Ltd. and Pick n Pay Stores Ltd. are expanding on the continent to take advantage of higher economic growth rates than in their home market and rising household incomes. U.S. chain Wal-Mart Stores Inc is also adding new stores in sub-Saharan Africa through its Johannesburg-based unit, Massmart Holdings Ltd. None of the four chains have entered Gabon.
Gabon, a densely forested nation on the west coast of Africa, is expected to see economic growth of 5.5 percent next year, compared with an average of 5.1 percent for sub-Saharan African countries, according to the International Monetary Fund. About 86 percent of the population are urbanized, Kearney said, while its stable middle class is “exactly what is lacking in so many other sub-Saharan African countries,” according to the report.
Gabon’s population of 1.7 million is its biggest downside, Kearney said, deterring retailers seeking larger populations and potentially higher sales volumes. Gabon was ranked as the fifth most attractive country by the consultancy in 2014.
Other countries that make the top 15 list include South Africa, the continent’s industrialized economy, Ethiopia, Ghana and Zambia. Kenya didn’t make the list as the East African country’s urbanization rate remains low, while there’s still some security risk following a series of attacks by Islamist militants, according to the report.