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DHL relies on retail expansion in Africa

By Staff Reports on May 7, 2014
tagged africa, dhl

Retail expansion is key to DHL Express’ Africa business strategy, said Sumesh Rahavendra, head of marketing for DHL Express, Sub Saharan Africa.

The recently released A.T Kearney African Retail Development Index further validated the company’s plans as it ranked the top 10 countries in Sub-Saharan Africa for retail expansion and highlighted Rwanda, Nigeria, Namibia, Tanzania and Gabon as Africa’s most attractive markets for retailers looking to expand.

Africa’s middle class has tripled over the last 30 years, and the trajectory suggests that the African middle class will grow to 1.1 billion in 2060, making it the world’s fastest growing continent, according to Deloitte.

This growth, coupled with the forecasted GDP growth of over 6 percent that the International Monetary Fund is predicting, drives the potential for retail growth on the continent significantly through increased purchasing power and consumer demand.

The growth of e-commerce and access to technology has further upended the traditional shopping experience for consumers.

“We are now in a position to directly relate growth in our retail footprint to growth in our earnings, so we know the potential is huge,” Rahavendra said.

According to the index, African retailers such as South Africa’s Shoprite, which operates in more than 16 African countries, and Nakumatt, which is based in Kenya and has stores in neighboring Uganda, Rwanda, and Tanzania, have done most of the expansion, but global retailers are moving in. In 2011, Walmart acquired South Africa’s Massmart, and it plans to open 90 supermarkets across Africa over the next three years.

DHL Express, who has a retail presence in over 2,400 outlets across Africa, will continue its expansion strategy in Africa in 2014.

“We have made great progress in making the global market and world at large more accessible and connected by increasing the number of points where customers can access DHL and our global network. This allows anyone – from a student to a small business – to access over 220 countries and destinations that we serve,” Rahavendra said.

Key retail markets for DHL are Nigeria, South Africa, Kenya, Tanzania, Uganda, Ghana, Senegal, Côte d'Ivoire, DRC, Zambia and Zimbabwe.

“Supply chains in Africa are more challenging than many other markets in the world,” Rahavendra said. “The key to success is understanding these challenges in order to offset the risks versus the opportunity which the continent offers. This knowledge will allow retailers to service markets with a supply chain that is agile enough to respond quickly to sudden or unexpected changes, flexible enough to customize products and efficient enough to protect margins.”