As Africa’s retail sector continues to grow, Industry leaders and experts in the retail sector have urged African businesses to expand beyond their domestic markets.
This was the crux of discussions at the Africa Retail Congress 2024, organised by the Lagos Business School (LBS) in partnership with Nairametrics, which was held on November 9th, 2024.
Speaking at the Congress with the theme “Retail Beyond Borders, Chris Ogbuechi, the Dean of Lagos Business School, stressed that growth beyond local markets is crucial for survival in today’s competitive global environment.
“As I always tell CEOs, innovate, grow, or die,” Ogbuechi remarked, underscoring the urgency for businesses to think beyond their domestic markets.
Strategic growth through cross-border trade
Ogbuechi spoke on the importance of regional expansion, citing how businesses that grow beyond borders are better positioned to diversify their revenue streams and reduce their dependency on local markets. “By venturing into new markets, we will not only diversify our revenue but also mitigate the risks associated with over-reliance on domestic economies,” he explained.
He encouraged Nigerian retailers to think like their global counterparts, using China as an example of a nation that continues to expand despite its large domestic market.
However, Ogbuechi was also candid about the challenges involved in cross-border retail.
He highlighted obstacles such as regulatory barriers, cultural differences, and logistical issues. These factors, he noted, can be formidable for businesses looking to expand beyond their borders.
Nonetheless, Ogbuechi remained optimistic, encouraging the audience to adopt innovation as a tool to overcome these hurdles.
“Strategic partnerships, technological advancements, and a commitment to excellence will empower us to overcome these challenges and emerge stronger in this marketplace,” he said.
The importance of understanding local markets
Following Ogbuechi’s remarks, a faculty member at Lagos Business School, Patrick Akinwatan, expanded on the theme of cultural sensitivity in retail expansion.
- Akinwatan noted that understanding the cultural landscape of new markets is essential for building trust and gaining customer loyalty.
“Always put yourself in the shoes of another,” he said, stressing the importance of empathy and cultural awareness when entering new regions.
- Akinwatan explained that businesses must pay close attention to local values, preferences, and traditions to ensure their products and services resonate with new customers. He also emphasized the need for businesses to engage with local teams in a way that fosters trust and collaboration.
“The ecosystem of your team is vital. You need to understand how your team feels and be invested in their well-being,” he added. This holistic approach, according to Akinwatan, is key to creating successful cross-border retail strategies.
Leveraging technology and data for expansion
In line with Ogbuechi’s call for innovation, retail leaders discussed how technology can play a pivotal role in overcoming the challenges of regional expansion.
CEO of Terragon Group, Elo Umeh, stressed the importance of integrating digital tools into retail businesses. “Retailers should be as diligent online as they are in their physical market,” Umeh said. He emphasized that adopting cloud-based technologies and using aggregated data are essential for retailers to fully harness the potential of artificial intelligence (AI).
CEO of Multipro Consumer Products Limited, Gaurav Dwivedi, agreed with Umeh’s point and highlighted the need for retail businesses to invest in digital transformation. “People assets refer to those you invest in, especially consumers. There is tech adoption or digitalization of your product,” Dwivedi explained.
Both Umeh and Dwivedi pointed out that as African consumers become increasingly tech-savvy, businesses must be agile in adopting digital solutions to meet their demands.
E-commerce and global market trends
Congress chair for the Africa Retail Congress, Prof Luis, highlighted the growing importance of technology and innovation for African retailers aiming to expand into international markets. “To upgrade in the global market space, retailers need to embrace technology and innovation to ascend borders and enhance customer experience,” Prof Luis said.
- He explained that adopting new strategies and leveraging emerging technologies will help African businesses navigate the challenges of cross-border trade.
- Luis also discussed the ongoing growth of the African real estate and e-commerce sectors, which play a significant role in retail expansion. “As of 2024, the real estate sector in Africa is restructuring its growth momentum,” he said, noting that the market is expected to reach approximately $600 billion and could exceed $1 trillion by 2026. E-commerce, in particular, continues to be a key driver of growth.
“The e-commerce sector’s value is expected to rise to around $35 billion,” he added. Luis also mentioned that modern retail formats, which account for about 35% of total retail sales, reflect a shift from traditional markets to more modernized retail spaces.
However, he also noted that infrastructure challenges persist, especially in areas critical for enabling seamless retail operations across borders.
Addressing barriers for small businesses and entrepreneurs
In addition to technological and cultural considerations, the congress also explored the financial and operational challenges faced by smaller businesses.
Commissioner for Commerce, cooperatives, trade & investment in Lagos State, Hon. Folashade Ambrose, noted that the Lagos State government has been actively working on policies to reduce barriers for small businesses. “Policy is important for retail growth,” she said, adding that goals such as enhancing digital retail spaces, providing stable electricity, and promoting financial inclusion were part of the Lagos state’s goals to support the retail ecosystem.
Ambrose also noted the need for greater internet inclusion among small business owners. “There is a need to invest in capacity building in the digital space. Technological inclusion enables cashless payments, investment management, and improved customer engagement,” she said. She stressed that empowering entrepreneurs with the right resources and skills is essential for helping them navigate the challenges of regional expansion.
Challenges of access to capital for retailers
Another barrier discussed at the congress was access to capital. Deputy managing director of retail south at Access Bank, Chizoma Okoli, pointed out that many small and medium-sized enterprises (SMEs) face difficulties securing financing for expansion. “As long as Access Bank is operational, we are in service to SMEs, because they are in the business of lending, and their services are tuned to serve the diverse aspects of every business,” Okoli explained.
Okoli noted that access to funding often depends on a business’s strategy and future vision. She encouraged business owners to be proactive in securing capital and advised them to look for alternative funding sources to fuel their growth ambitions.
The role of social media and mobile technology
Head of retail at Microsoft, Titilayo Akinwale, discussed how mobile technology and social media are powerful tools for reaching new customers.
Akinwale urged businesses to tailor their marketing strategies to different regions, investing in local audiences and understanding how technology is being adopted in those areas.
“Invest in local target audiences, especially for those that are not yet familiar with social media,” she said. She also encouraged businesses to make their presence felt both physically and digitally, as online activity continues to grow across the continent.
