Rising consumption is helping drive sector expansion

As in most sub-Saharan markets, the retail sector has traditionally been dominated by small grocery stores, markets and street sellers in Gabon. However, large-scale retailing took off in the 1990s and continues to expand, thanks in large part to not only headline growth rates, but also to rising household consumption among middle and upper-middle class segments, where spending is particularly robust on a regional level as a result of Gabon’s high per capita income.

While small-scale and informal commerce continue to represent a large proportion of sales – perhaps as high as 70% according to local retailers – major outlets are also expanding their footprint, spurred by economic growth, increased purchasing power and government efforts to subsidise key food products. In a 2013 study by US consultancy AT Kearney, Gabon was ranked the fifth most dynamic retail market in Africa after Rwanda, Nigeria, Namibia and Tanzania.

Turnover

The study indicates that retail turnover has seen annual growth of around 13% in the last three years. Retailers confirm this accelerating pace. Bernard Azzi, director-general of Prix Import, told OBG, “Greater exposure to formal commerce, in addition to rising purchasing power, has professionalised the retail sector and raised the level of consumption, creating a more demanding pool of consumers.” Despite significant income disparity in Gabon, local purchasing power is still higher than many other countries in the sub-region, leaving considerable room for retail growth. Gabon enjoys an average per capita income – estimated at $10,650 in 2013 – far higher than the sub-Saharan Africa developing country average of $1624.

The formal segment is dominated by three local retailers: Céca Gadis, Prix Import and Mbolo. Another domestic firm, SanGel, is carving out a greater market share of imported frozen foods. The Ceca Gadis group comprises the 2000-sq-metre Géant CK do supermarket in central Libreville and a number of other outlets, including Gaboprix, a chain of around 50 basic goods stores located around the country; the Supergros wholesale and cash-and-carry store, which has two outlets in Libreville and Port-Gentil; CK2, a household goods store that also has a branch in each of the country’s two main cities and a CK2 Meuble furniture outlet in Libreville; and CK do, a chain of around 50 small and medium-sized supermarkets.

Mercure International of Monaco (MIM) operates the 5000-sq-metre Mbolo shopping centre in Libreville through its local subsidiary, Sodigab. Mbolo is based on a franchise of the French supermarket chain Géant Casino following an agreement signed in 2007. The centre hosts a branch of MIM’s City Sport chain, along with other smaller shops and franchises.

Prix Import operates four outlets in Libreville, consisting of a store in the city centre with 2000 sq metres of retail space and others in Owendo, Golf and Okala, near Libreville airport, which opened in February 2011. The four stores combined have a retail surface area of 3600 sq metres. The Owendo outlet is part of a three-storey mall operated by the firm that includes a restaurant, a bank and 32 apartments. Okala is also a mall development in which frozen meat retailer SAN has an outlet. SAN, which has 200 employees, imports and distributes mostly frozen meat products, with chicken accounting for a large proportion of turnover. The bulk of the firm’s sales are wholesale transactions, mostly to supermarkets, while the rest is retail. The company operates four outlets, two of them at Port Mole in Libreville. The other two are in Olomi and Okala, the latter having opened in November 2010.

Unsurprisingly given the concentrated population, the lion’s share of retail sales and outlets are concentrated in Libreville and Port-Gentil. In the interior, the market is met by small-scale vendors, many of whom source their goods from major distributers.

Sourcing

Gabon imports the vast majority of food products and other retail goods. Food is largely imported from Europe, South America and, to a lesser extent, neighbouring countries like Cameroon. Still, given the historically high costs of local production for major consumer products, the imports have not necessarily had a negative impact on retailer performance. In previous years, based on OBG surveys, margins for retailers ranged from 5-10% on average per imported container – with between 1500 and 2000 containers a year – and up to 30% for luxury goods.

Rising Demand

Despite the small size of the formal market, demand for imported products has grown quickly in recent years, even during downturns in the economy. For instance, between 2009 and 2011, as Gabon was struggling with low growth on the back of a contraction in GDP, wine imports grew 88% in value and 7% in volume. Meanwhile, beer imports grew 64% in value and by 63% in volume, poultry imports were up 40% in both value and weight, beauty product imports rose by 208% in value and by 36% in quantity, while imports of perfumes grew in volume by 8%.

All imports pass through the Port of Owendo, which can create bottlenecks for retailers. Jean Sylvain Ndong, secretary general of Ceca Gadis, told OBG, “The distance from foreign suppliers can create problems related to payment, transport or logistics, but these are manageable, as are occasional delays related to the Customs processing of imports.” Congestion is an issue at the Port of Owendo and ships are often forced to wait a long time, which can put upward pressure on prices. However, the Customs system is improving. Port logistics are crucial given that 85% of food in Gabon is imported, though there are indications that this is beginning to change, in line with government plans to boost the country’s self-sufficiency.

Retailers have demonstrated their interest in relying more on locally produced goods as they become available. Agro-industry, for example, is a priority of the agricultural development strategy being drawn up, which should boost the variety of local produce. The current range is limited to some fruit and vegetables, flour and eggs, and is subject to supply interruptions. In the medium-term, at least, Gabon’s retail sector will remain reliant on imports, which contributes to the relatively high cost of living. To combat rising prices, the government moved in 2013 to exempt around 200 basic food products, such as tomato sauce and rice, from Customs duties and value-added tax. According to local retailers, the price of basic products is now lower than in neighbouring countries.

Informal Commerce

Open-air markets remain an important point of sale in the capital and elsewhere. Prices here remain more affordable for a large segment of the population, but this exacerbates the role of the informal economy. The state has moved in recent years to increase regulation of small vendors in order to migrate activity to the formal sector.

Libreville’s primary marketplace, Marché de MontBouët, is set to be replaced by a new 70,000-sq-metre facility, the Grand Marché de Libreville, which is scheduled to open in 2016. The move is much-needed, as overcrowding and unregulated expansion in Marché de Mont-Bouët have led to dangerous operating conditions in the past. A wooden section of the market caught fire in October 2013, leaving large sections inoperable; this was the third fire in the Mont-Bouët market in as many years. Located adjacent to MontBouët, the Grand Marché will offer 3000 standardised and regulated vendor stalls, as well as a modern commercial centre with two 900-sq-metre store plots. The new development is meant to modernise retail shopping in the crowded capital, ensure safety and health oversight, and strengthen sector regulation. Swiss group Webcor was awarded a 50-year operating concession and will be financing the €41m construction phase, which began in November 2013.

Given the high level of import prices, street markets will continue to play an important role for the foreseeable future, particularly in the lower two quintiles of the income spectrum. The government has sought to crack down on unauthorised vendors in recent years, including in advance of the 2012 Africa Cup of Nations, but they will continue to fill a void until formal retailers are capable of addressing the tighter margins of sales to lower-income households.