How has e-commerce growth transformed Côte d’Ivoire retail sector

The retail sector in Côte d’Ivoire has expanded significantly in recent years, attracting foreign brands and seeing the emergence of a number of national retail companies. The issuance of identification cards to official retail traders has helped organise the largely informal commercial sector. The programme also enables small shopkeepers to gain better access to funding. Several new opportunities for growth are emerging as the country undergoes rapid urbanisation, its middle class expands and industrialisation gathers pace.

Structure & Oversight

The Ministry of Commerce, Industry, and the Promotion of Small and Medium-sized Enterprises (SMEs) oversees activities across the retail sector, working closely with the Ministry of Economy and Finance. The interests of commercial enterprises is represented by the Côte d’Ivoire Chamber of Commerce and Industry, which provides support to businesses. In 2017 the government established a new commission, the National Council, consisting of ministry representatives and actors from the private sector, trade unions and consumer associations. Its principal role is to monitor the prices of everyday commodities.

The credit ratings agency Fitch Solution increased its inflation prediction in 2022 from 2.6% to 5% due to rising inflation across West Africa fuelled by increased energy and food prices worldwide and the disruptions associated with Russia’s invasion of Ukraine in February 2022. Consumer prices in the country increased by 4.2% in 2021, with food prices in particular rising due to poor weather conditions affecting harvests. This trend will likely continue in 2022 due to shortages and difficulties across supply chains. In March 2022 Souleymane Diarrassouba, minister of trade and industry and SME promotion, announced that the government would provide more than $88m to tackle increasing commodity prices. Under the programme, the prices of several staple food products will be controlled.

Performance & Size

The retail sector is playing an increasingly important role as the country becomes more urbanised and its middle class expands. Consumers are gradually shifting towards formal retail spaces, which offer a variety of products and services. People are increasingly visiting modern retail centres as migration to cities increases, in line with Côte d’Ivoire’s transition from traditional agricultural work to industrial expansion. Indeed, a 2020 analysis predicted that an additional 600,000 sq metres of retail space would be added through to 2030 to meet the rising demand.

In 2021 the retail sector’s contribution to GDP was just over 14%. The retail sector’s turnover index increased by 5.9% year-on-year in the first quarter of 2021, with household consumption reaching $40.6bn in 2020, indicating a change in income.

Growth Trends

The expansion in the e-commerce segment during the Covid-19 pandemic demonstrated the potential of the consumer market. With 35% of the population having received at least one dose of the vaccine by June 2022, household consumption is likely to continue its upward trend. However, traditional trade through open markets and local shops still dominates the retail sector. The practice of bargaining remains common, and many Ivorians value knowledge about and price of the products they buy regularly.

Significant efforts have been made to formalise the sector, principally with the introduction of an identification card for retailers. Launched in 2018, it allows official retailers to access retail financing schemes, online banking for businesses and other benefits. The programme aims to facilitate financing in the sector, enhance social security for retailers, improve distribution routes and gather more reliable information. However, the sector remains largely informal, with the grey economy comprising around 75% of all retail businesses. High retail rents and government red tape have driven many retailers to sell their products online, and further incentivised informal retail sales.

The Ivorian economy has been one of the fastest growing in the world, with average annual GDP growth of 8% from 2012 to 2021. Despite this progress, poverty remains the country’s most compelling challenge. The poverty rate fell from 46.3% in 2015 to 39.4% in 2020, and was largely concentrated in urban areas. Meanwhile, rural poverty levels increased by 2.4 percentage points over the same period. Nonetheless, the country’s retail market is expected to steadily expand over the next decade due to rapid industrialisation and a growing expatriate community. In addition, consumption is expected to be a major contributor to GDP growth, which is projected to reach 6% in 2022.

Two distribution companies dominate retail: Groupe Prosuma, the country’s largest local retailer in terms of revenue, and Compagnie de Distribution de Côte d’ Ivoire (CDCI). The two companies have been competing for market dominance by offering promotions, reduced prices and loyalty card programmes. For example, in 2018 French retail group Carrefour, in partnership with CDCI, formed a sales platform with online sales leader Jumia in response to Prosuma’s launch of the online marketplace Yaatoo. Several international companies have also entered the market, including Carrefour in 2015 and Moroccan company Retail Holding in 2014. Targeting a wider spectrum of consumers, these projects demonstrate the shift from local retail to large-scale urban spaces.

Supermarkets

Most wholesale outlets and modern shopping malls are located in Abidjan, Côte d’Ivoire’s industrial and trade centre. Several company headquarters, banks, regional offices and outlets are also located in the city. As of mid-2022 Abidjan was home to nine shopping malls, the most recent of which was the Ivoire Trade Centre. The Investment Promotion Agency of Côte d’Ivoire worked to facilitate such retail activity by making it easier for foreign companies to enter the local market by acting as a one-stop shop for new businesses in the country.

Carrefour has partnered with the specialist distributor CFAO, a group serving middle-class consumers across Côte d’Ivoire, Cameroon and Senegal. CFAO operates 18 production and assembly sites for the automotive, health care, plastics, beverage and cosmetics markets. It opened a Heineken-partnered BRASCO brewery in Congo in 2015 and a Yamaha assembly plant in Nigeria in 2016. As of mid-2022 there were eight Carrefour hypermarkets across Côte d’Ivoire.

CFAO most recently launched a 750-sq-metre Supéco Terminus 47 store – a budget Carrefour shop – in Sogefiha district in February 2021. Among the biggest supermarket brands are King Cash and Hayat. They offer imported goods and target the middle class as they are viewed as more expensive than local brands.

According to a 2021 report from market researcher Sagaci Research, the leading supermarkets in terms of customer satisfaction were Carrefour, Super U and BonPrix, while stores in the market that ranked lower were Club Sococé, Supéco, Casino, Leader Price, CDCI, Miniprix and Monoprix. Smaller supermarket stores are gradually becoming more widely recognised. Miniprix increased its brand awareness from 15% to 20% between March and July 2021, according to the survey.

Retail Holding entered Côte d’Ivoire in the hopes of using Abidjan as a launchpad for expansion across West Africa. In 2019 the company acquired a majority stake in CDCI, whose operations it plans to modernise throughout Côte d’Ivoire. The Ivorian retail chain currently has 122 stores across the country, with 57 shops in Abidjan. It has three store models: wholesale, semi-wholesale and retail sale. Retail Holding hopes to open 20 to 30 new CDCI stores a year starting in 2022, totalling 100 new stores by 2026. In May 2021 Retail Holding inaugurated an 11,000-sq-metre logistics centre for the movement of merchandise to stores.

Shopping Malls

Shopping malls are an increasingly popular option for commerce. In August 2021 Ivorian firm Emergence Plaza issued a green bond to refinance its debt to build the Cosmos Yopougon shopping mall. The shopping centre was built across 3 ha in 2018 and in July 2020 was awarded an Excellence in Design for Greater Efficiencies (EDGE) certification – an award established by the World Bank Group’s International Finance Corporation (IFC) to measure the environmental impact of buildings. In line with its efforts to support sustainable development, in August 2020 Emergence Plaza announced that it reduced carbon emissions from the mall by 44% between 2018 and 2020 by implementing the EDGE system to optimise energy consumption.

This was the first example of a francophone West African country issuing this type of bond, offering optimism for similar developments across UEMOA. The green bond was valued at $18.1m and allowed the company to secure financing when many traditional banks were not funding climate projects. Société Ouest Africaine de Gestion d’Actifs purchased the Cosmos Yopougon eight-year notes at a yield of 7.5%.

In August 2021 London-based real estate investment company HC Capital Properties announced plans to issue green bonds in the future to develop similar retail spaces across francophone West and Central Africa, including in Cote d’Ivoire. Efforts such as these are expected to boost job opportunities in the retail sector and spur formalisation by developing local supply chains and expanding domestic retail brands.

There has also been an increase in the number of high-end boutiques in Abidjan. The Ivoire Trade Centre, inaugurated in Cocody, Abidjan in September 2021, is working to position itself as a destination for luxury goods. It provides 13,000 sq metres of office space and a 4000-sq-metre mall.

E-Commerce

The e-commerce segment is steadily growing in Africa. An expanding youth population, supported by high levels of smartphone uptake and greater urbanisation, could see the segment develop substantially over the next decade. Africa has already become a leader in mobile transactions, accounting for around 50% of global transactions by value in 2021. Businesses and individuals alike have benefited from this fast-paced digitisation of payments. The number of people accessing social media services has similarly increased, with social media penetration projected to reach 557.8m by 2025. According to research firm Statista, Côte d’Ivoire’s e-commerce revenue is expected to reach $561.3m in 2022.

A report by the Telecommunication Regulatory Authority revealed that mobile penetration has also increased considerably reaching 149.4% in 2020 – meaning that many of the country’s 26m citizens have more than one mobile account. Orange, MTN Group and MOOV Telecom are the main networks, offering 2G and 3G services in 90% of the country. 4G services are available across around 59% of Côte d’Ivoire, and the government is working to launch 5G coverage by mid-2023. Smartphones are an important driver of internet use, with 98% of the population accessing it through their mobile phones. Meanwhile, the number of fixed internet subscriptions remains low but is gradually increasing, rising from 175,000 in 2018 to 260,000 in 2020, according to the World Bank. Around 36.3% of Ivorians had access to Wi-Fi in 2019.

In 2020 a Mastercard report on consumer spending revealed that three in five consumers in Côte d’ Ivoire were using more online shopping services since the start of the pandemic. Over 55% of respondents said they were spending on topping up data, 61% on clothing, and 48% on computers and other equipment. Around 57% of consumers said they use online banking. Several highlighted the role of social media in retail, with 85% saying they had found new sellers on Facebook and 34% on Instagram. In addition, 73% of SMEs stated that they believe e-commerce services will have a positive impact on their business. This corresponds with a 2021 finding from the OECD that 70% of SMEs worldwide increased their use of digital services in response to restrictions imposed during the pandemic.

The use of online platforms reflects a growing trend of retailers turning to social media to sell their products to help alleviate high rent prices and taxes on sales in formal spaces. A shop in the centre of Abidjan can cost between $200 and $2000 a month, with an obligatory 12-month deposit. Meanwhile, the average monthly wage in Côte d’Ivoire is $156. To help circumvent these costs, small-scale retailers are establishing a presence on social media and paying courier services to deliver their products at a comparatively low price.

Côte d’Ivoire’s e-commerce is largely unregulated, allowing retailers to sell their products informally online. This highlights the potential of the segment to bolster government revenue once it is formalised. Value-added tax stands at 18%, except for some basic food products, on which it is levied at 9%. To help capture some of this revenue, in January 2021 the government introduced a new law requiring delivery services to obtain a licence to deliver parcels, at a cost of $10,000.

Ooutlook

Greater formalisation could fuel retail sector growth as urbanisation encourages consumers to spend in supermarkets and shopping malls. Côte d’Ivoire has experienced significant economic development in recent years, which should support the establishment of a more structured commercial sector. Even so, much of the retail market remains informal, with low interest in formalising due to the high costs.