August 3, 2016

Calculated Risk, Focused Reward

2016, POV, Hot Topics

INTRODUCTION TO THE SERIES:
Navigating Africa's Fuel and Convenience Retail Opportunity

What does it take for a retailer to succeed in Africa’s complex fuel and convenience landscape? Where should you invest capital and how can you ensure the best performance and return? In this three-part series, Kalibrate

  • takes a look at where growth opportunities exist in Africa

  • identifies key hurdles that fuel and convenience retailers will need to overcome, and

  • offers strategic takeaways to enable long-term success.


PART 1 : CALCULATED RISK, FOCUSED REWARD

by The Kalibrate Team

Think about driving a modern sports car down a winding mountain road. It’s well-paved. The weather is good. Traffic is predictable. And the car has all the modern safety gadgets. You’ve got the wheel, but—let’s be honest—the car is doing most of the work. If you’re a fuel and convenience retailer in the US or parts of Europe, this is the business situation you’re in. Strong communication, and good infrastructures help businesses make informative decisions and reduce risk.

Now imagine that same trip in a sports car from the 1970s. The weather’s cloudy, the pavement could use some work. Traffic is unpredictable, and the car has plenty of power but no automatic anything. You need to keep a firm grip on the wheel and never let your attention drift.

Surviving and thriving in Africa’s complex fuel and convenience retail landscape takes a special level of tenacity, agility and resilience. There is no time to lean back and enjoy the ride. There is no cruise control or autopilot. That’s why the key to business success in Africa is based on smart data, carefully planned and executed in order to mitigate risk.

Great risk, great reward

Africa is a dynamic, exciting market to be in; there is so much potential. But nothing’s easy. With 54 countries, over a billion people, areas of political instability, volatile markets and infrastructure in different phases of maturation, some of Africa’s markets can be a challenge to work in. But if you get it right, the rewards are wonderful. The people who succeed in Africa know a sense of satisfaction that is unchallenged. They have a sense of where the future is and make sure that future happens. Fuel and convenience retailers who have a clearly defined strategy that integrates short-term flexibility with long-term patience will be the clear winners.

Africa is like nowhere else in the world, and success depends on taking the time to gain a deep level of understanding of each region where a company wants to operate. Strategy and regional specificity is crucial. Some global brands have in the past tried to simply replicate a developed-market business model across too many diverse regions and have not achieved the full business success that they could have. A few major global oil companies have divested their networks in Africa and the gap in the market has often been taken up by aggressive regional or national oil companies who see Africa’s growth potential.

Africa’s fuel retail markets have a lower density of sites than in developed countries, which changes the equation for profit performance. Meanwhile, fuel market regulation is different from country to country. Investment in Africa must consider business models that work in regulated, deregulated and hybrid scenarios. Those various models have very different impacts on consumer demand and the importance of brand, customer service and mix of offerings.

KEY TAKEAWAY: Be patient and focused. Companies operating in Africa’s fuel and convenience retail sector must be ready to give their strategies enough time to develop and take hold. There are no shortcuts. This patience requires focused resources and attentive leadership. (Read more about local focus coming up in Part 2.)

KEY IMPLICATION: Fit your growth strategy to local conditions. Whether you buy or build, the pace of growth must allow you to execute with focus and attention in each local market.

KEY QUESTION: Do you and your company have the temperament to succeed in Africa? Succeeding in African fuel and convenience retail takes a keen eye for calculated risk. It attracts bold-hearted businesspeople who thrive in dynamic, complex conditions. If that’s you, welcome to opportunity.


Talk with a Kalibrate Strategist about your opportunity in Africa.

Read Part 2: Succeed With a Lot of Littles

Read Part 3: Living Strategy, Improving Performance
 

ABOUT KALIBRATE
Kalibrate's 7 Elements for Fuel and Convenience Retail Success is the industry’s best-in-class management framework. It enables corporate strategies to adapt to local needs while maintaining an overarching network viewpoint. Kalibrate enables Total Site Visibility for Total Site Profitability. We are the trusted adviser to global brands and ambitious independents in Africa and five other continents. Our strategic expertise and technology solutions deliver fuller visibility, truer insight and more effective control over your fuel and convenience retail network. Your adaptive edge.™

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