The retail sector in Ghana will likely witness significant growth despite rising living standards, falling unemployment rates and lower inflation point leading to a likely change in consumer demand in the country.
According to Oxfordbusinessgroup, the sector tends to lag behind macroeconomic indicators, as it takes time for GDP growth to feed through to real incomes, and for cautious consumers to be sure that tougher financial times are over.
“This explains why some retailers found that Ghana’s strong economic performance in 2017 and early 2018 did not necessarily lead to lively growth in sales during that period. However, by the end of 2018 the signs of retail recovery were clearer. The consumer confidence index compiled by the Bank of Ghana (BoG) rose by six percentage points in the last quarter of the year to 98.3”.
The Managing Director of Kasapreko Beverage Company, Richard Adjei speaking in an interview then, posited that, “We are seeing purchasing patterns begin to change in Ghana. The expansion of supermarkets and shopping malls represents the growing value of retail space, and indicates an advancing middle class with increased discretionary spending power. That being said, we are also seeing growth from the informal retail sector, which often manifests itself as street-side trading”.
The Bank of Ghana in its Quarterly Bulletin report for the first quarter of 2020 disclosed that, retail sale went up from GH169.34 million in the first quarter of 2019 to GH236.85 million in the first quarter of 2020, representing an increase of 39.9 per cent.
This was due to an increase in household consumption in the first three months of 2020.
“Economic indicators such as consumer spending, vehicle registration and industry consumption of electricity went up but tourists’ arrivals and port activities declined during the review quarter mainly as a result of the closure of the borders and the lockdown,” the statement pointed out.
Deloitte US, heading into 2020, noted that, the retail industry was already in a worn-out state, with heavy debt burdens, slow asset turnover, compressed margins, and increased competition. It however maintained that, retailers have been able to regroup and analyze how COVID-19 has reshaped their business, leaving a clearer picture of which costs they can live without and which ones they can’t.
“This may prove to be an opportunity to rebalance cost structure. For retailers battered by lockdowns and the economic effects of the pandemic, it’s a fundamental requirement. Long-contemplated cost reductions, such as rationalizing store footprints and reducing business travel, can now be pursued in the name of COVID-19 response”.
Retailers are now grasping the importance of reacting more quickly to consumers’ needs and realize the value of greater resiliency and agility.
Market research company Nielsen ranked Ghana fourth out of eight countries in its “Africa’s Prospects: Macro, Business, Consumer and Retail Indicators” report for the second quarter of 2018.
This is a fall from second place in the previous edition from the fourth quarter of 2017. Ghana is one of the African economies surveyed by the company in which retailers saw an increasing willingness by consumers to spend in store between 2014 and 2018, however, “despite easing inflationary pressures, Ghanaians are least open to trying new alternatives, with purchasing decisions rooted in familiarity, trust, availability and affordability.”
Given the disruption consumers felt during the pandemic, it will be important for retailers to build back confidence by “winning the last mile, fortifying every link in the supply chain, driving decisions through the consumer lens, and measuring resiliency investment”.
