Morocco: Revving up retail
Spurred by increasing domestic demand, double-digit growth in credit card usage – including online transactions – is helping to lay the groundwork for a further expansion and deepening of Morocco’s retail sector.
While Morocco has long sought to position itself as a major exporter in a variety of segments – ranging from automotive parts to agricultural products – steadily rising internal consumption has emerged as major engine for the country’s economy, with clear benefits for retailers.
As the economy has expanded, wealth creation has grown accordingly, along with living standards. The ranks of the middle class have swollen and consumption has similarly ballooned. Consumer credit companies in Morocco granted more than Dh41bn (€3.7bn) in loans last year, up noticeably from the year before. In 2011, car sales grew by 10%, with a majority of the overall new purchases having been manufactured or assembled in-country.
Admittedly, an increase in purchasing power is to be expected in an economy such as Morocco’s that posted GDP growth of 4.6% in 2011. However, what bodes particularly well for local retailers is the increasingly sophisticated manner in which consumers are buying goods.
According to numbers published by domestic card issuer the Interbank Payment Centre (Centre Monetique Interbancaire, CMI), the number of credit cards in circulation in Morocco has risen by 13.6% year-on-year, to more than 8m. Credit card transactions accounted for more than Dh160bn (€14.4bn) worth of goods and services.
Given the preponderance of cash-based transactions in neighbouring countries or other emerging markets in the Middle East and North Africa region, these numbers are impressive. However, what is even more striking is the fact that in 2011 online transactions accounted for Dh513m (€46m) worth of transactions, equivalent to a growth of some 72% over the Dh298m (€26.7m) worth of transactions in 2010, on top of 90% from 2009. The number of online transactions doubled to roughly 700,000 between 2010 and 2011.
The impressive rise in online credit card transactions opens up a whole new world of 24-hour, 7-day-a-week growth for retailers, and indeed, the range of services now online testifies to the extent outlets are catering to growing demand. Everything from taxes to phone subscriptions and school fees can be paid online, while shoppers can peruse local flash sales to travel options to groceries, all on local websites.
Maroc Telecommerce, a local company offering online payment management for retailers, has signed up more than 200 outlets to its platform. According to the firm, the value of the average payment has dropped slightly from 2010, from Dh900 (€81) to Dh750 (€67), but it attributes the change to the increased range of products and services available, as opposed to the more limited range of travel options previously available.
The comparative success of the payment services industry could be a seen as a boost to the government’s aim of expanding the formal retail sector in the country. Large-scale retail, including major firms such as Label’Vie and the Marjane Group, comprise a modest amount of total activity, equal to roughly 10%. The majority of trade happens in informal souks or small family-owned stores
The government strategy for transforming those local markets into modern-day retail outlets is embodied by the “Rawaj Vision 2020”. Adopted in 2007, the programme has a number of ambitious goals, including tripling the sector’s earnings, boosting GDP contribution to 15%, from closer to 12% currently, and modernising existing shops.
Furthermore, the ministry hopes to develop a total of 15 malls for the country, accounting for 3000 franchise stores and for the sector to help provide a total of 450,000 jobs. There have also been discussions for building new hypermarkets and outlet and discount stores.
The much-vaunted launch of Morocco Mall in Casablanca at the end of last year – billed as Africa’s largest, spanning 70,000 sq metres and offering outlet space for 350 retailers – is a testament to those ambitions. The shopping centre has created an estimated 26,000 direct and indirect jobs and is expected to draw some 15m visitors each year, according to statements released at the time of its opening.
Even outside of the credit card industry and the flashy malls, the government’s programme is bearing noticeable fruit. In 2011, Morocco ranked 17th on the AT Kearney Global Retail Development Index, which ranks the top 30 emerging countries for retail development for international investors. Should these encouraging trends continue, they will help ensure that increasing sophistication on the part of both the consumer and the retailer will help underwrite the potential for continued long-term growth in the retail sector.