How to increase sales through traditional retail?

Despite the growth of modern trade in emerging markets, traditional trade still represents a significant opportunity: In Latin America, it accounts for 40% of retail sales; in most African countries, outlets such as markets, street vendors and mom-and-pop shops still dominate with more than 70% of purchases.

Acknwledging the difference of African and Latin American markets, many consumers show similarities: they are widely dispersed and located in remote areas, cannot afford to travel far to shopping destinations and lack the room at home to store large quantities of purchases. In addition, the large number of markets makes it hard to track goods through to the final consumer – all factors that markets in which modern supermarkets succeed meet. Thus, traditional trade outlets in Africa and Latin America are difficult for multinational corporations to penetrate.

Endeva recently took a closer look at the retail sector and its micro-entrepreneurs in Tunisia, where modern retail is on the rise but traditional shops still dominate. Our partner Fundes analysed three key business imperatives for consumer goods companies to succeed in traditional trade from the perspective of Latin America:

  1. Develop sophisticated segmenting strategies and micro-understanding: A simple segmentation based on sales data is not enough; forward-looking parameters such as store size, proximity to workplaces or schools, traffic volumes, neighborhood wealth, or shelf space are crucial.
  2. Train shopkeepers and monitor in store execution: traditional shopkeepers are key because they are the one deciding the main product and brand portfolio in the store. Implementing and engaging programs for shopkeepers to help them taking their business to the next level should hence be considered as a key strategy.
  3. Invest in power partnerships with distributors: generating strong, collaborative relationships with distributors can provide a true competitive advantage in a Latin American retail market where most retailer-manufacturer relationships tend to be rather transactional than collaborative.

Endeva and Fundes are now looking into how technological solutions can be used to increase the productivity of SMEs in order to better integrate them into larger companies’ value chains. If you want to learn more, contact Isabel von Blomberg.