Thursday, May 30, 2024

Merchandising challenges in the African micro-retail environment

Effective merchandising is integral to retail. When servicing Africa’s micro-retailers, it’s vital
to understand the merchandising challenges and set standards, says Tielman Nieuwoudt.

MERCHANDISING IS A KEY component for any retailer, as well as for the FMCG sales and marketing teams who use merchandising techniques to promote brands and increase sales in those retail outlets. However, in Africa’s numerous small ‘traditional retail’ stores – as opposed to the more sophisticated ‘modern trade’ supermarkets – there are many merchandising challenges. Often it is unprofitable for sales teams to service these micro-retailers at all. And if they do, salespeople will frequently spend less than eight minutes in the outlet – with the focus on getting the order rather than allocating time to any merchandising activities.
In most cases, small micro-retailers will not even buy directly from brand owners, manufacturers or their national distribution network. As they prefer to buy smaller product quantities, they are more likely to make use of local wholesalers or distributors to break bulk into more affordable quantities.
Typically, such outlets will remain ‘underserviced’ in the formal sense and won’t qualify for minimum drop sizes set by delivery companies (the drop size being the amount of inventory purchased and delivered per visit).
If these outlets receive delivery services at all, the bigger distributors will, at best, provide only limited merchandising services. This is because their salespeople are mostly not incentivised to do this work and their focus is on earning sales commission.
So, for the majority of Africa’s micro-retailers, merchandising will be their own responsibility and they will
receive limited or no external support

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