Continent-wide, only 5% of the population shops at large retailers or malls. This low figure is explained by the fact that the population is largely rural. Traditional distribution circuits including street traders, informal outlets and market places represent 90% of the distribution system in Sub-Saharan Africa. Brands are obliged to go into the field to meet their consumers.
Sub-Saharan Africa's distribution network follows a pyramid structure: large distributors feed secondary arteries that diffuse the merchandise. A variety of products flows through the capillary structure that supplies markets, street stands and reaches secluded villages. Small retailers are equipped with ambulatory kiosks and circulate by motorbike, scooter or minivans. To facilitate transportation, but also to respond to a variety of budgets, these vendors offer a variety of packaging options that includes mini formats and unitary doses for cosmetic products.
This system has disadvantages for producers whose margins are reduced by the number of intermediaries, and whose products are displayed with their competitors' on street vendors' stands. Some brands, such as Nice & Lovely, have established road shows to present their products to consumers in remote rural areas.
Some English speaking countries such as South Africa and Kenya now have shopping malls in adequation with international shopping standards. The specific configuration of other Sub-Saharan countries does not facilitate the development of malls, however, as infrastructure is inadequate and property taxes are high. Furthermore, products available in large retail stores are costly due to customs rates and VAT. Large retail is challenged with seducing a middle class that consists mostly of low-income households. By consequence they remain accessible primarily to the affluent.
World Retail Congress Africa 2013
The changing face of retail in Africa Gareth Pearson - BMi Research