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African Powers of Retailing New Horizons for Growth

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African Powers of Retailing New Horizons for Growth African Powers of Retailing New horizons for growth Foreword The report is the first in an annual series The natural link between the retail International retailer interest in Africa For both international and African where we track the progress of the top opportunity and understanding the also appears to be increasing with early companies seeking to invest on the Welcome to the African retail performers on the continent. consumer is illustrated in our recent stage retail development representing continent, the opportunities clearly We have set out to provide a comparative report – The Deloitte Consumer Review: significant potential as retail chains exist. There are local players to partner first edition of our macro-view of African-based (or ‘home Africa: A 21st Century view. It highlights develop, gain economies of scale, and with who know the markets, understand grown’) listed companies whose core 5 key pillars of the consumer opportunity food safety and higher store standards their cultures and speak the languages. African Powers of business is retail. African-listed subsidiaries in Africa: the rise of the middle class, become embedded in shopper of large global retailers are included as exponential population growth, the expectations. We look forward to discussing retail Retailing report, individual entities, while we have chosen dominance of youth, rapid urbanisation, expansion on the continent with you, not to focus on foreign multinational and fast adoption of digital technologies. The emerging importance of and and welcome your feedback and which identifies companies with operations in Africa. increasing competition in forecourt thoughts. The data unearths some insights into While our top 25 retailers are concentrated retailing is notable in Southern Africa. the Top 25 listed the regional retail players, their successes in South Africa, we are observing the However, we are keen to track how and some of their stories. And most emergence of companies such as this further develops on the continent African Retailers by importantly, we believe that it opens Zambeef (Zambia), Choppies (Botswana), as the forecourt is increasingly becoming André Dennis up conversation and stimulates robust and Société Magasin Général (Tunisia) a central location for the consumer, Africa Consumer Business Industry debate around business model adaptation, as some of the fastest growing on the revenue. especially beyond major centres. Leader innovation and strategic decision making continent. The fastest growing 10 when it comes to retail in Africa. retailers also have a wide geographic Its methodology The barriers to retail success mentioned Dylan Piatti presence with an average country in the report mirror many current views, Africa Consumer Business Chief of Staff The African market is diverse, complex, presence in 8 countries and an average and include a shortage of high-end retail is based on our interesting, and characterised more by store count of more than 900. space, infrastructure issues, political informal than formal retail. The rising instability and currency challenges. annual Global middle class is however contributing to Although still in its infancy, the African the modernisation of retailing and greater digital evolution is a promising prospect They are, however, predominantly man- Powers of Retailing consumer market opportunities. for retailers with the eCommerce market made, and with increasing investments Moreover, Africa has become a laboratory expected to be worth approximately in Africa, can be overcome – the question report which has for experimentation in mobile and US$50 billion by 2018 – some of Africa’s is, how long will it take? It appears eCommerce, and presents a challenging most successful emerging eCommerce some key players on the continent are been showcasing opportunity. Many African economies businesses originated in Nigeria and considering this ‘timing’ to such an are transitioning towards consumption have expanded from there across the extent that they are exploring additional the changing global driven markets which is, to some degree, continent. As a result, we have taken a market investments outside the reflected in the country retail contributions brief look at some top African eCommerce continent – this includes retailers such retail landscape for to GDP where both East and West Africa players (e-retailers) and the landscape as The Foschini Group, Shoprite Holdings, have 10 countries with retail revenue that the likes of Konga, Jumia, Yuppiechef, and the SPAR Group – looking as far as over 10 years. contributions of greater than 50%. takealot and Bidorbuy are playing in. Europe and Asia Pacific. African Powers of Retailing 2015 1 Study methodology and data sources Company inclusion criteria The study is intended to provide a reflection of market Retail revenue includes the following components: Retail companies based in Africa and listed on the dynamics, the African players and their impact on the The study is continent were included in the top 25 African powers African retailing industry over a period of time. As a result • Food service sales if sold as a merchandise offering of retailing, based on their non-auto retail revenue for of these factors, growth rates for individual companies inside retail stores or if the restaurants are located intended to provide fiscal year 2013 (encompassing fiscal years ended may not correspond with other published results. within the company’s stores through June 2014). • Franchise or licence fees, royalties and commissions a reflection of Data collection and methodology related to retail activity African-listed subsidiaries of large global retailers Each of the top 25 companies were analysed on key • Membership fees market dynamics, are included as individual entities in this report, and parameters such as financials, core and ancillary retail • Sales of services related to the company’s retail it is aimed at identifying those listed companies that sectors, geographic presence, store formats and store activities, such as alterations, repairs, maintenance the African players one could consider “African” or “Local”. We have footprint. The key financials collated were group and installations highlighted some notable examples of exclusions in revenue, retail revenue, net profit margins and return • Wholesale sales to affiliate or member stores, and their impact the appendix which are a result of this methodology. on assets. Group revenue reflects the consolidated net including franchise stores revenue of a retailer’s parent company, whether or not • Other miscellaneous revenue, unless it relates to on the African To be included on the list, a company must derive that company itself is primarily a retailer. The retail a specific non-retail business segment the majority of its revenue from retailing, and retailing revenue figures in this report reflect only the retail retailing industry activity should form its core business. Private equity portion of the company’s consolidated net revenue. Financial information used for each company in a and other investment firms are not considered as retail As a result, they may reflect adjustments to reported given year is based on the company financial reports. over a period of entities in this report – only the individual operating revenue figures in order to exclude non-retail operations. Where a company may have restated prior-year results companies. Note that Angola and Ethiopia do not The retail revenue figures are converted to US$ based to reflect a change in its operations or as a result of an time. have stock exchanges and, therefore, retail companies on the average exchange rates of the corresponding accounting change, such restatements are not based in these countries were not included. period, according to a standardised fiscal year definition. reflected in this data. Retail trade comprises establishments that are engaged Data referred to as fiscal 2013 will include full-year data in the sale of merchandise, generally in small quantities for companies whose fiscal years ended between 1 July to the general public, and the rendering of services 2013 and 30 June 2014. Year-over-year (y-o-y) retail incidental to the sale of merchandise (e.g. delivery, revenue growth, CAGR retail revenue, net profit margins installation, maintenance, repair, alterations). The revenue and return on assets were calculated based on company- derived from such service activities is included in the reported currency figures. The broad categories of retail African powers calculation of retail revenue. sectors and store formats considered are given in the Appendix at the end of this report. Food services companies and restaurants are not included in this list as they are generally considered to be part of For eCommerce companies, retail revenue includes the leisure and hospitality sector of the economy. Further to this, motor vehicle dealers are excluded along with only direct business to consumer (B2C) sales where retailers that derive the majority of their retail revenue the company is the seller on record. It excludes the from the sale of motor fuel, as they are considered to sales of third-party sellers as well as third-party seller be primarily petrol stations. fees and commissions. 2 Table of contents Foreword 1 Study methodology and data sources 2 African retail trends 2015 5 Our Top 25 African retailers 9 Top 25 highlights 10 Geographical perspective 13 Product sectors 19 Top 10 25 Fastest 10 27 Overview of African e-retailers 30 Appendix
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