Kevin Motaroki | 1 April 2020 | Published on Nairobi Law Monthly
How do Kenyan FMCG distributors achieve their remarkable productivity levels? What role do tech and mindsets play?
Productivity and speed to deliver are key criterion within the supply chain, particularly in the FMCG sector. The faster the delivery and the smoother the processes such as invoicing with no glitches, the better the experience for the retailer. It’s all about providing instant service that not only fulfills but exceeds expectations and increasing contact between distributors and retailers. Sure, technology can enable this with just-in-time supply, seamless processes and the elimination of bottlenecks.
However, in countries like Kenya, there have been unprecedented levels of productivity that outstrip other countries (such as South Africa). This is evident in the number of retailers that Kenyan distributors in the FMCG industry are able to call on in a day/week. The Nairobi Law Monthly spoke with Andrew Dawson, the Commercial Director at MACmobile, to discuss how FMCG distributors in Kenya are able to achieve these unusually high levels of productivity, the role that technology plays and the mindset that drives this behaviour.
Everyone wants to grow, but there is bigger business through collaboration and other mutual ecosystems. Is this something to be advocated for?
There is plenty of room for partnerships in and around Africa, and this is something that should be advocated over individual enterprises. This is a business approach that many companies in Kenya should transition to if they haven’t already as this encourages an overlap of customer loyalty, increases benefits and expertise and hopefully increases overall profit.
Data is becoming the foundation for strategic and tactical decision making. How do insights about consumer behaviour increase efficiencies and informing innovation to drive up margins.
Customers are often willing to pay a premium for an excellent experience over a competitor that offers the same product or service but that does not deliver on the customer experience. Delivering products that effectively cater to customer needs, and creating a memorable and pleasant encounter, requires businesses to have a significant depth of understanding of the customer. This, in turn requires analytics, which hinges off clean, customer data. It is crucial that businesses adapt to the needs of the customer in order to drive margins up. This can only be done through data insights.
What role does shopper segmentation and buyer profiling play in tailoring marketing and messaging?
Customer profiling has never been so important. Creating a customer profile based on the Universe of One enables the brand and retailer the ability to provide personalised offers or discounts based on actual buying patterns and behaviours rather than a broad-based persona. This, in turn, results in ensured sales and more often than not, customer loyalty.
In many markets, adoption of business strategies is about regulation and accountability. Is trust a huge factor in how well markets respond?
Trust is definitely a huge factor in how well markets respond to business offerings. For consumers who are new to this sort of marketing, this could affect their ‘buy-in’ which ultimately could hinder the success of the strategy. Moreover, from a regulation perspective there is also a fine balance between the need to understand customers and the need to maintain the ethical use of data without infringing on customer privacy.
What consumer nuances differentiate Kenya from South Africa?
In Kenya, there is a wider variety in terms of stock and what a person can find on the shelves. Kenya has micro pockets where brands are surviving, and this means that these brands have equal presence in the market when compared to South Africa. In South Africa one finds major brands displayed more prominently than smaller brands.
How do these nuances explain disparities in growth between the countries in the FMCG sub-sector?
Manufacturers and merchandisers in Kenya seem to find the gap, obtain a local solution and go to market with the product in order to fill the gap more efficiently. With the prolific General Market brands in Kenya equally exposed to the market, loyalty becomes high in specific pockets and areas and therefore preference is often given to locally manufactured products. Typically, in South Africa the reliance on Modern Market ensures certain bigger brands fill the market and keep a large portion of the market share.
Market data shows that over 75 percent of FMCG transactions occur at below one dollar. Is this reflected in south Africa, and do the differences in purchasing power explain market growth disparities?
In 2019 the South African economy experienced a prolonged downturn, with growth forecasts being low. This lack of growth suggested an ongoing recession. It created pressure for businesses, but particularly in the Fast-Moving Consumer Goods (FMCG) space. Consumers began to spend less in retail as their budget decreased. Using techniques such as data analytics, to reduce the cost of getting product to market can significantly increase profit margins without increasing customer spend.
In 2018, concerns around quality, extra charges, product examination and delivery time are some barriers to purchasing goods online. How far has the FCMG space come in regard to solving these and related issues?
Both manufacturers and retailers are turning to science and technology to start optimising the value chain and increasing profits. Just in Time (JIT) manufacturing and distribution enables manufacturers to analyse their sales using actual data. They are then able to determine where opportunities might exist. Without real-time data, manufacturers and retailers will not be able to solve the issues consumers have with regards to the quality of products, timeous delivery and online purchasing.