Industry Analysis; Retail Market - Algeria
Retail in Algeria is seeing continued growth. The sector is highly fragmented with 95% of the sector controlled by private businesses.
RETAIL IN ALGERIA CONTINUES TO GROW
- Retail has seen continued growth in value in Algeria.
- This has been driven by both store-based and non-strore-based retail.
- Retailing in the country is still fragmented, with many small independently-owned businesses making the core of the retail segment in the country.
- Both local and international brands have a strong presence in the country.
- A 2017 Euromonitor report noted that the Algerian retail sector is expected to growth by 34% between 2015 and 2021.
- Major global brands such as Aldo, Zara and Mango operate in Algeria and the French hypermarket chain Carrefour also has a presence in the country.
- The main factor that has contributed to the growth of the retail sector in the country is the shift from socialism to consumerism.
- Improving infrastructure in the country and better education opportunities has been noted as another reason for the growth of the retail sector.
- Modern retail accounts for 3% of the annual turnover in the country.
- Grocery stores and supermarkets are spread out evenly across the country.
NUMBER OF LARGE STORES ARE INCREASING IN ALGERIA
- Large shopping malls are continuing to spring up in Algeria such as the Oran shopping mall. Their presence is contributing to the growth of the retail segment in the country.
- A growing number of people prefer to shop once a week in hypermarkets compared to visiting the traditional retail stores in the neighborhood on a daily basis.
- In 2009/2010 Algeria passed several laws that required that 51% ownership of all foreign investments must be Algerian.
- This has made it difficult for large stores and hypermarkets like Carrefour to expand.
- In 2016 (according to the Algerian Register of Commerce), Algeria had 1415 retail markets, 38 of these being hypermarkets and 232 supermarkets.
- The largest conglomerate in Algeria is known as UNO. The company has 23 stores in the country, 5 of these being hypermarkets, 1 supermarket and 1 convenience store.
- UNO is the brand name of Numidis, Algeria's largest conglomerate.c
INFORMAL SHOPS AND DIRECT SELLING ARE POPULAR IN ALGERIA
- Informal shops dominate the retail market in the country.
- Private businesses in Algeria control 95% of the retail trade, with a strong presence of European investors.
- Private business are mainly owned by shopkeepers of informal shops.
- The state and state-owned firms sell imported foodstuffs, industrial supplies and pharmaceuticals as well as supplies.
- The majority of distributors are also informal shopkeepers, working from small shops across the country.
- Direct selling is expected to see substantial growth over the next few years.
- Growth in this route is set to be due to the increase of the younger population of consumers and agents who have driven the use of technological tools that contribute to companies' growth.
- Technological strategies such as managing orders through mobile devices and digitizing catalogs will also increase in prominence.
- Algerians enjoy direct selling due to the fact that they have products delivered straight to their homes.
- They, however, prefer to purchase homeware and home furnishing products directly from the retailers.
INTERNET SELLING IS GAINING POPULARITY
- Internet selling is still small in the country.
- However, the sector is expected to grow due to the growth of internet usage and the new reforms in the legal and banking sectors in the country.
- The ecommerce market in the country is still growing, however, it is still relatively small compared to the ecommerce market in countries like Egypt and Morocco.
- The country does not have any official figures on the market but the market's potential is said to be $5 billion.
- The leading internet sellers in the country are Zawwali, Batolis and Dzboom.
- 2018 laws on online selling in the country state that online stores have to host their websites in Algeria and should be registered in the country's commercial register.
- The country's law also does not allow the purchase of goods from outside the country and the government does not intend to open emarketing for foreigners.
- Intermediary companies offer citizens access to goods on sites such as Amazon and Aliexpress.
- 6% of the country's population, that is 2.45 million, had shopped online by 2017.
BEAUTY PRODUCTS ARE MOST POPULAR IN THE DIRECT SELLING SECTOR
- This route to market is still in its early stages, however, the most popular sectors are the beauty and personal care products.
- The direct selling companies that are successful in the country are beauty brands.
- Beauty and personal care are expected to see new players in the market.
- Oriflame is the most popular direct selling company in the country.
- The company has a 4% value share in non-store retailing in the country.
- This is attributed to Oriflame's strong network and marketing campaigns.
- The company saw growth in 2017 due to its high brand awareness as well as its large network of sellers.
- French beauty product, Arcancil Paris, also has a presence in the country.