I am sitting in the Wimpy at the Engen 1 Stop in Beaufort West, a town in the semi-desert Karoo. It is 3:45 PM and the temperature outside is 32°C. I have driven four hours from Cape Town seeing the vast landscapes of shrubs, hills and blue sky.
The wind is blowing outside and the poplar trees swaying with their green leaves shaking about. My food is already 15 minutes late and I open the local community newspaper because I know my chicken and salad is going to take at least half an hour.
I flip through the newspaper and my eyes stop at the editorial on page 4. This is what interests me:
The editor of Francois van Niekert expresses concern about the foreign arrivals who are setting up several retail stores to sell cheap goods. He asks whether anyone has worked out how much money is being taken from the mouths of the local people who are trying to keep their tiny shops going.
Even someone who is not the brightest bulb on the tree will know that in highly contested markets you can’t just sit back and hope for the best.
For years the low-income market has been underserved with products and services that are too expensive for the price-sensitive poor consumer. Now, competition has come from foreign arrivals who have supply lines to the cheapest goods in the world.
You can’t put the toothpaste back in the tube. This low-priced competition is here to stay and it will grow. More will seek their fortunes in these dusty Karoo towns where the majority is poor.
Selling to the low-income market requires initiating change, spotting opportunities and building new business models. Distribution, local manufacturing, pack sizes, service, communication – all need to change to address this market segment.
Sustainable business ideas, rethinking existing products and services and innovation are required. Orana, a Danish supplier of fruit-based all materials ditched high-end Tetra Pak cartons in Zimbabwe and used more affordable plastic sachets. Local shops need to, for instance, promote their guarantees and returns policies which low-income consumers won’t get at the dumped price knickknack stores.
I’ve had “Don’t just stand there, do something” ground into my head in the cut-throat fields I worked in. Small businesses must do something but be clever about it. Remember: don’t attack walled cities, the people will fight to the death. Take an alternative route. Approach from a new angle.