Low-income markets hold promise for business owners with imagination and innovative ideas

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You begin to see the face of the real challenge outside of the main cities. In these towns economic opportunities are scarce, economic activity is slow or declining and unemployment is high.

All this means that the majority of people in these towns have low income or no income. They often live in shantytowns and have little or no formal education. And the quality and quantity of products and services in these bottom of the pyramid markets is low.

This low-income market was served for many years as a kind of add-on or simple nuisance for some retail traders. Others saw potential and brought furniture, clothing and groceries that were specifically aimed at these low-income consumers. I needn’t mention the names; visit these towns and some of the familiar ones are still there.

Are you still with me? Good. Because now we come to how to serve this market. To make goods and services available in this market requires radical rethinking:

It can include new product formulation, low-cost local manufacturing (or local assembly), low-cost distribution, special packaging for daily purchasing and value pricing. In some countries personal care products and other consumables are sold in single-server packages. Services also need to be provided at convenient times and places for the poor consumer – often after hours/often after hours.

One of the community newspapers in a Karoo town expressed concern about foreign nationals setting up retail trading outlets for their cheap imported goods. In a strange sort of way this is a left-handed compliment for those who are serving this market of poor consumers. Now they can buy goods when they are most needed rather than having to wait until they have enough money to buy from the more expensive stores.

Rather than feel angry about the cat that got the cream, it’s time for local business people to rethink, re-evaluate, retrain and innovate if they want to serve the low-income consumer.

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