Africa’s retail landscape is undergoing change. Analysts project a sustained shift from informal to more formal retail markets as a result of emerging economic and demographic trends.
UK-based Retail & Leisure International (RLI) says these emerging trends are shaping the future of African retail for the better citing recently completed and pipeline retail projects as a positive bet on the continent’s future, for certain reasons.
First, Africa’s 18 largest cities are projected to have a combined spending power of $1.3tn by 2030. In addition, the continent will have as many cities with one million inhabitants as North America at the time.
According to the African Development Bank, consumer spending on the continent will top 2.1 trillion USD in by 2025 and with the youngest population in the world, it is up for grabs.
Second, the continent has the fastest rate of urbanization in the world with more than 40 percent of its population living in urban centres, a figure projected to grow bigger in the coming decades, creating demand.
A report by retail software platform, Compliant IA says that wholesale and retail are already the third-largest contributor to Nigeria’s GDP while Kenya has seen a 54 percent growth in its number of stores over the last five years and South Africa has almost 2,000 shopping malls covering over 24 million square metres.
The fundamental fact of Africa’s future retail outlook is that 53 percent of African income earners are between 16 – 34 years old, an age group primed for consumption.
This presents an attractive proposition for investors and developers. Project completions and pipeline retail developments attest to this, despite the oversupply.