|Informal Business: Township Hair Salon, South Africa, January 2008 Photo Credit: Niti Bhan|
|Formal retail:Haircare products, South Africa, January 2008 Photo Credit: Niti Bhan|
While still largely based in the informal economy, the African haircare business has become a multi-billion dollar industry that stretches to China and India and has drawn global giants such as L'Oreal and Unilever. ~ Reuters, 6 Aug 2014
This snippet captures what I'd said in my HBR article on the challenge to marketing posed by the African consumer market. The size and value of the opportunities are undeniable as are the impact and influence of the informal sector.
Chaos, uncertainty, word of mouth, personal relationships and far too much flexibility is how those accustomed to the muted muzak of their local supermarket would describe an open air bazaar bustling with matrons ready to haggle with their favourite merchants over the price of onions while tramping through the narrow muddy paths in between the umbrellas and the rickety wooden structures.
This stymies the multinationals accustomed to ever increasing efficiencies in supply chains and distribution. L'Oreal's website goes as far as to explicate all the challenges faced in distribution. The demand is there, how do we satisfice it in a profitable manner? seems to be the message.
Fragmentation of the retail space, prevalence of informal markets, a preference for 'break bulk' shopping daily in small quantities, all add up to a distinctly different consumer culture - an African one - that has been evolving quietly under the radar. It is only now that Africans are being perceived as consumers in their own right and the emerging middle classes capturing the attention of global giants. The hair care industry's size and value, is not so much an overnight development as it being taken seriously as a viable opportunity.
If we go by the plethora of management consulting reports highlighting the African consumer market's opportunities, there's an underlying assumption common to all that existing systems can simply be put into place, if only there wasn't so much informality. Is that a realistic wish in the near term given the vacuum of infrastructure?
Simply building a supermarket in suitable locations will not work, as Shoprite discovered in Arusha, Tanzania, people's purchasing patterns were influenced by so many more factors than just a lack of modern retail. It makes sense, then, to look at the consumer culture that exists, than to bemoan the fact that its completely unlike what 'global giants' are accustomed to dealing with, or to attempt to introduce solutions without taking the entire ecosystem into account.
If we are indeed to begin to address the challenge of satisfying the demands of Africa's emerging markets, then we need to step back and look at it from an entirely different perspective. CK Prahalad once described what he called the tyranny of dominant logic and offered an alternate way to look at the challenge of dealing with the fragmentation, informality and inadequate infrastructure of the developing world. He proposed turning the problem on its head and looking at it from the lens of the constraints and conditions that are existing, then innovating to meet the criteria rather than attempting to force fit success metrics from one operating environment into the context of a wholly different one.
What if we were to do the same for the African consumer market? To begin from the point of view of understanding entire ecosystem of trade and how it works, mapping the existing landscape, and then seeking to develop solutions that would fit contextually.
This conversation will be continued.