Côte d’Ivoire's increasingly competitive market and growing middle class drive retail growth and foreign investment

 

Political stability and continued economic growth are bringing about significant development in Côte d’ Ivoire’s retail sector. The Ivorian middle class is growing, currently representing over 2m of the country’s 23m inhabitants, according to government figures, and is attracting large flows of foreign direct investments to the consumer goods segment. Production facilities are being introduced to the country, shopping malls are launching, and from 2013 to 2018 retail points and e-commerce platforms became increasingly popular. As consumer habits grow and evolve, this is especially true in the economic capital of Abidjan.

The competitive landscape in the retail sector is intensifying as well. In this regard, the country has seen both the development of large hypermarkets as well as the modernisation of traditional retail spaces, with a notable focus on the economic capital of Abidjan, which has attracted the majority of investments to date. However, an increasing number of companies are beginning to expand operations into other cities in order to further penetrate the market and service the population.

Supermarkets

The rise of the middle class, responding to recent reliable economic growth and political stability, has allowed for the modernisation of Côte d’Ivoire’s retail sector. The entry of major players such as Casino and Carrefour and the introduction of supermarket malls in the country seem to suggest that consumption trends and mentalities are evolving. However, despite the rise of modern retail in the country, the informal segment still represents the bulk of the retail market, accounting for 85%, according to a study conducted by OnPoint Africa Group, an Ivorian market research firm that examines developments in the Ivorian retail sector.

The market is highly competitive, pitting traditional local grocery stores against new entrants, and internal logistics remain problematic. That said, the competition is mostly focused on Abidjan’s developed neighbourhoods, although there is also a clear rising pattern of demand in interior areas. For these reasons, major chains operating in today’s market are focusing on educating consumers about modern retailing, in line with local conditions. To help accomplish this goal, retailers are diversifying their products to include as many local sources as possible.

This is the case for Prosuma, the country’s largest local retailer in terms of revenue, that is active in supermarkets and shopping malls. Its stores offer international brands and local incumbent ones that make up more than 60% of its products, according to Veronique Bouvier, Prosuma’s marketing manager. The retailer introduced the Casino Mandarin chain of proximity stores to the country and aims to open 10 stores. Compagnie de Distribution de Côte d’ Ivoire (CDCI), another important player in the Ivorian market, is developing a dense network, aiming to reach 200 stores by 2020, up from the current 127. Its goal is to establish these stores in Abidjan and other influential regions in the surrounding area.

Shopping Malls

In 2015 Côte d’Ivoire saw the opening of the 20,000-sq-metre PlaYce Mall in Abidjan’s Marcory district, built in partnership with Carrefour, covering 3200 sq metres. Similarly, PlaYce Palmeraie opened in Cocody Riviera in 2017 with 29,000 sq metres of space total and a 2400-sq-metre Carrefour Market located inside.

Abidjan added an eighth commercial mall in 2018, Cosmos Yopougon, after the introduction of a number of shopping centres in the country encouraged by modernised consumer trends. Cosmos Yopougon opened in the commune of Yopougon, the largest neighbourhood of the city, with more than a million inhabitants. Funded and built by the UK’s HC Capital Properties and the Sarada family, and operated by US firm Cushman and Wakefield, the commercial mall cost CFA18bn (€27m) and is built on a 3-ha site, with 41 national and international brands. Carrefour Market has invested €6m for a supermarket on the grounds. The opening of Cosmos Yopougon shows a major shift in commercial real estate trends in the city, as malls are typically focused on the neighbourhoods of Marcory and Cocody, and targe the middle and upper classes. The Cosmos Yopougon mall will also create a new dynamic for real estate and retail in the commune of Yopougon, a large industrial area of the capital adjacent to the largest industrial zone. The location choice will introduce modern retailing to under-developed areas, unlike most current shopping malls, and target Abidjan’s middle class.

E-Commerce

Beyond physical retail, the country is witnessing an e-commerce revolution. More Ivorians are gaining access to the internet and using it for a variety of shopping purposes. From a legislative perspective, the country passed a law in 2013 that aimed to effectively regulate and bolster e-commerce activities along with administering rules on personal data protection. Jumia, an e-commerce pioneer in the region, offers a combination of 30 different distribution points in addition to an online platform to its users. “Ivorians are notable consumers; they tend to purchase home appliances and smartphones and pay cash on delivery in 95% of cases. That said, there unfortunately are only 6m Ivorians with access to internet, due to high costs,” Richard Philippe, chief commercial officer of Jumia, told OBG. “There are, of course, major logistical challenges in the country given the lack of affordable, high-capacity, third-party logistics companies. As such, we have an integrated distribution network and warehousing facility. Despite this, logistics costs are high, both in Côte d’Ivoire and beyond. There is indeed a clear need for a free trade zone to be established between the countries in the West African region.”

Disorganised logistics networks are one of the sector’s key challenges. Beyond inadequate transportation and its impact on product quality and company margins, inadequate storage and warehousing affect agricultural perishable products. However, the retail sector is a major source of growth for the economy. The modernisation of the country’s retail model and network is primarily based on rising demand driven by Côte d’Ivoire’s emerging middle class. The introduction of international FMCG brands in the country are attracting foreign direct investment in proxy markets, particularly upscale malls, with a focus on Abidjan’s high-end district, Cocody and Marcory.

Retailers have a growing interest in penetrating the country’s interior regions in order to access a larger share of the population and prepare for expansion into surrounding subregions. Indeed, the entrance into the country’s interior is necessary for modern retailers to gain market share. To accomplish this, retailers will look to partnerships with local players in order to take on the informal segment, and improve logistics networks and supply chains.

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The Report: Cote d’Ivoire 2019

Industry & Retail chapter from The Report: Cote d’Ivoire 2019

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