Why are fast-moving consumer goods supermarket businesses struggling in Sub-Saharan Africa?

EKibuuka Let me share my understanding of why supermarket chains focused on fast-moving consumer goods (FMCG) face challenges in Sub-Saharan Africa. Having studied this market closely, I can point to several key factors:

The biggest hurdle is that most consumers still prefer traditional open markets and small local shops. These informal retail channels account for about 80-90% of grocery sales in many Sub-Saharan countries. Why? Because they offer what many customers need – the ability to buy in very small quantities, negotiate prices, and maintain personal relationships with vendors who might extend informal credit during tough times.

Then there’s the infrastructure challenge. Running a modern supermarket chain requires reliable electricity, good roads for deliveries, and efficient cold chains. Many areas still struggle with power outages and poor transport networks, driving up operational costs significantly.

The income factor also plays a crucial role. Many consumers have irregular income patterns and live on daily or weekly wages. This makes it hard to do big weekly or monthly shopping trips that supermarkets typically cater to. Instead, people prefer buying small amounts daily from nearby shops.

I’ve also observed that local shopping habits don’t always align with the supermarket model. Many customers value the social aspect of shopping in traditional markets – the bargaining, the community interaction, the ability to thoroughly inspect fresh produce. Supermarkets can feel impersonal in comparison.

That said, there are some success stories, particularly in urban areas where middle-class consumers are growing. Companies that have adapted their models – offering smaller pack sizes, incorporating some elements of traditional markets, and carefully choosing their locations – have managed to gain footing.