Having a startup business can really be stressful especially when you are at loggerheads with yourself on how the work will be handled. In most cases, the main question is whether to have employees or hire freelancers. This post will take you through some of the...
Brimore: A Case Study of Egypt’s Freelance Small Holder Manufacturing Marketing ProgramAbstractThe fast-moving consumer goods industry is facing a major upheaval. With FMCG experts incessantly discussing the meteoric rise of Amazon and applauding the initiation of new business models such as meal-kit deliveries and subscription services, could this be pronouncing the end of an era of the brands we know? What does it mean for brick-and-mortar retail, especially for growing markets like Egypt? The case study will be analyzing Egypt’s FMCG industry, intending to provide the right market distribution strategy for its small local manufacturers. IntroductionA marketing sales strategy begins the moment manufacturers place a price on a product, which they can only term successful when a customer completes the purchase. The shifting shopper influences are continuously changing how consumers are making purchase decisions. Freelance social media in Dubai for example, is fast becoming a useful tool for marketing local products and services since shoppers can get tailored deals matching their local needs. Consumers in Egypt are no exception to the dynamics, where they have made several purchase decision changes after the nation’s currency devaluation in 2016. Manufacturers and retailers are trying to keep up with the transformations through a mix of innovation strategies, including introducing e-commerce metrics as well as price and promotional offers in the fast-moving consumer goods industry, also known as FMCG. Some have to hire freelance sales teams to ensure local market penetration and boost revenue. The Egyptian FMCG expenditure continued growing throughout 2018, recording double value increases thanks to inflation. Challenges in the Egyptian FMCG MarketingWhile consumer spending is increasing, how are manufacturers and retailers leveraging their sales strategies to reach the customer effectively? Nielsen, a measurement and data analytics firm worldwide, recently organized an event in Egypt with participation from industry players across several categories. The event showcased several areas where sales strategies in the country’s market need attention. The FMCG market in Egypt is growing at an average rate of 17% for high-selling products. However, the growth still sees small scale manufacturers losing considerably in wasted opportunities in the pricing, distribution, promotion, and on-shelf. The losses keep diverting from their sales strategy. The retail landscape in Egypt remains traditional trade heavy. Some of the districts record significantly more sales than others, which presents various challenges, especially in in-store sales strategies. Nielsen’s event shared some insights on the reality of events in the Egyptian market. Pricing is the only element in Egypt’s marketing mix that gives revenue, with many other areas, including inventory, assortment and shelving, and distribution accounting for lost opportunities and wasted effort. Statistics indicate that nearly 67% of promotions across the world do not break even. Trade promotions often fail than they succeed, leading to billions of dollars in losses for the industry every year. While trade promotion management isn’t a new thing, many local manufacturers are yet to realize the efficiency they seek. In the meantime, higher trade spends ROI intensifies with stalled FMCG growth. As a result, the local manufacturer industry keeps facing more pressure due to retailer price wars. Several common but costly mistakes that local manufacturers should avoid include:
The above common product distribution mistakes contribute to the prevailing situation in the industry. Few local manufacturers and retailers have overcome the effect of these mistakes, which continue derailing their promotion and pricing strategies. The good news is you can avoid these mistakes once you detect them. However, the challenge is that recognizing the blunders is not enough. Local manufacturers and retailers should commit to altering practices and approaches for the long term. Distributing A Product And Reaching The Consumer In EgyptWith a 2.38% growth rate, the Egyptian population was approximately 99 million in 2018, according to its Government website. The same source shows a 1.86% annual urbanization rate, with about 42.7% of the people living in cities. Nearly 95% of the population is found in the narrow Nile River strip because most of the nation is desert. Market Analysis in EgyptWet markets and traditional grocers largely dominate the retail market in Egypt, with nearly 115,041 personal grocery stores across the nation, according to Euromonitor. The two categories account for 97% of the country’s retail groceries and 70% of the total sales, which have a loyal neighborhood consumer base because they are easy to access and often provide credit to the local customers. On the other hand, growth rates for modern retailers concerning sales and outlets were favorable in 2017. 1. Retail Sector
According to the Ministry of Trade and Industry, Egypt is the most diverse economy in the MENA with the largest retail consumer market. Small and private stores dominate the retail sector despite the economic slowdown resulting from the regime changes of 2011 and 2013. The short-term adjustment notwithstanding, analysts still expect an improvement in purchasing power and economic growth in the coming years. News outlets have opened in the nation since 2014 with a focus on lower-income consumers. Hypermarkets doubled food sales by the end of 2018 from the 2011 statistics, while supermarkets had steady growth. An increase in sales follows the tremendous growth in small-scale outlets. Despite the rapid growth, modern supermarkets represent about 25% of the total sales. The hypermarket section is still small, with 37 operational outlets in the nation in 2017, according to Santander. The outlets represent about 4.9% of total sales in the retail segment. Similar statistics indicate growth in retail sales among convenience stores, recording a 21.5% increase in 2016. 2. Purchasing Power
Egypt’s last Gross Domestic Product per capita was recorded in 2017 at 2785.37 US dollars, representing 22% of the world’s average, according to the latest records from the State Information Service. The country’s GDP per capita was averagely 1542.04 USD between 1960 and 2017. The figure reached an all-time high of $2,785.37 in 2017. Egypt’s median salary is EGP 6,000 every month, with an EGP 22,883 per capita disposable income in 2014. Consumer spending went down to EGP 880 billion in 2018s second quarter, from EGP 896 billion in the first quarter of the same year. The average consumer spending in Egypt was EGP 314.12 billion between 2001 and 2018, with an EGP 1,026 billion all-time high in the 3rd quarter of 2017 and an EGP 63 billion records low during 2002s 2nd quarter. When the central bank floated the Egyptian pound in 2016 to secure a $12 billion IMF loan to accelerate economic growth, the currency lost half the value, resulting in record-high commodity prices. The EGP went from an 8.8 peg to the US dollar to about 17.7 currently. Consumers have had to change their spending habits to reflect their incomes and savings that were slashed in half. The table below shows Egypt’s purchasing power parity between 2017 and 2021
Source: IMF – World Economic Outlook Database 3. Market Share
Large numbers of small stores run by families dominate the retail market. Mass product distribution represents a new trend in Egypt, catering to a slight percentage of consumers with access to sufficient earnings. Plenty of private mini-markets such as Metro, Sunny Supermarket, and ABC, with larger storage spaces exceeding 100M2, are opening. Besides, numerous supermarkets are burgeoning in the nation, with the Carrefour Group’s five outlets dominating the sector. Concerning the market share, small family-owned stores represent 70% of retail sales compared to 30% for the hypermarkets and supermarkets. 4. Consumer Behavior
According to Nielsen’s 2017 survey, consumer behavior in Egypt has changed significantly owing to the currency devaluation and long-term economic recession. The study reports consumers;
Price, which has always been a vital factor in making purchase decisions, still comes first over other criteria, resulting in lower sales for branded products and luxury items at supermarkets. The study by Nielsen shows;
Besides, survey participants reported consuming more local products because they are less costly than imported merchandise. Myriad financial challenges such as high inflation and devalued currency continue influencing consumer confidence, hence household spending.
A table showing Egypt’s household consumption expenditure. Source: State Information System, 2018 The following table compares Egypt’s household final consumption expenditure between 2016 and 2018.
Source: World Bank According to the State Information System, the following table represents Egypt’s consumption expenditure by product between 2012 and 2013.
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February 2020
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