Interview: Nasser Seklaoui
What impact will the development of large malls and markets have on the sector?
NASSER SEKLAOUI: The advent of new shopping malls has opened up prospects for growth across all consumer goods segments. Formerly, retailers had little leverage when negotiating leasing contracts. In the case of electronics, mall operators expected margins ranging from 20 to 25%, making it unattractive for both buyers and sellers, consequently stunting the development of the sector. In turn, retailers either chose to open standalone structures or remain informal.
With the arrival of more large-scale retail outlets, we have begun to see a shift in mentality from both sides. Mall operators are offering more flexible conditions, while expecting lower margins ranging from 9 to 10%. Thus, customers are becoming less adamant about shopping in formal structures as they can find closely matched prices elsewhere. Nevertheless, leasing contracts in malls remain unattractive, and much work is still needed to make large-scale retail outlets a central part of the consumer experience in Côte d’Ivoire.
How can large-scale shopping outlets cater to changing consumer patterns?
SEKLAOUI: Most large-scale retail outlets can be found in Marcory and Zone 4, with the most recent additions in Deux-Plateaux and Cocody. Construction of a new mall has begun in the most densely populated commune of Yopougon, in Abidjan. Given the demographics of the area, I think that a single mall will not be enough to respond to the needs – and expectations – of the local community. While Yopougon is classified as one of the poorest communes, it is also home to a lower-middle and middle class that have the purchasing power to shop at large-scale retailers.
As cities become increasingly congested, individuals seek convenience and proximity, as well as areas for leisure, making malls an attractive alternative. In this context, it is crucial for new shopping centres to also offer restaurants, bars and miscellaneous activities, to provide a complete experience.
What are the biggest challenges facing the sector, and how can they be addressed?
SEKLAOUI: The informal sector remains the biggest challenge to the industry. Cross-border trade remains very opaque, and the authorities have little control over imports. Côte d’Ivoire trails behind its neighbours, such as Ghana, in the implementation of certificates of conformity for imported products, resulting in the dumping of substandard-quality or counterfeit products.
Moreover, the process through which products such as spare parts are imported remains unclear and lacks transparency. While countries like Senegal and Ghana tax such products at a standard 5%, the same parts in Côte d’Ivoire can be taxed from 1 to 10%. Harmonising and clarifying import processes, as well as lowering tariff and non-tariff barriers, remains paramount to reinvigorating the sector and provides additional incentives for retailers to move into formal channels.
To what extent is consumer demand driving the output of products in the market?
SEKLAOUI: Growing demand for consumer goods is closely related to the price of agricultural commodities, especially cocoa. The drop in cocoa prices in 2017 resulted in lower sales, which will inevitably continue to impact the market through to 2018. Nevertheless, the diversity of Côte d’Ivoire’s agricultural output – as a major producer of cashews, palm oil and rubber, to name a few – means that we also have intermittent growth spurts throughout the year.
The majority of the population remains extremely price sensitive, requiring manufacturers and retailers to maintain strict cost controls and find innovative ways to optimise processes across their value chains. In this context, providing products that are adapted to local needs can offer strong prospects for growth.
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