WHAT is emerging from research findings published in October last year by the McKinsey’s Africa Consumer Insights Centre is that African consumers are more sophisticated than what stereotyped pre-conceptions may hold.
The Human Capital Telescope by Brett Chulu
The report, titled The Rise of the African Consumer, is of interest to strategic human resources (HR) in that strategic HR works from the outside-in premise in which the expectations of customers, regulators, shareholders and other key external interest groups are creatively addressed through interventions in talent, leadership and culture.
In the context of the McKinsey report, strategic HR in Zimbabwe is expected to study the customer insights from sub-Saharan Africa and pro-actively craft a portfolio of possible strategies to build the right talent, leadership and cultural capabilities in preparation for possible consumer shifts.
I have selected two consumer trends to illustrate how strategic HR can leverage on the insights from the McKinsey report to contribute towards sharpening a business’s competitive edge.
Burgeoning urban youth
According to the McKinsey report, the age group 16-34 years accounted for 53% of income in the survey.
The consumption habits of this demographic unit are more of an aspirational nature than of a utility nature.
For instance, 16-34 year-olds were found to be more worried about brands, were more image-conscious and more likely to follow fashion trends as well as search for information from the internet than those 45 years and older.
The report predicts that as consumers from youth cohorts grow older, they will define the dominant societal norm because of their consumer habits and superior collective economic power.
At least three implications for strategic HR can be drawn from the research.
First, the obvious implication is that savvy African executives will put in strategies to follow the money where it will be concentrated in future. Thus strategic HR can help the business to grow with brand-conscious young consumers as they grow older through building a customer-connection culture that forms life-long relationships.
This can be done using strategic HR tools which direct employees to adopt repeatable patterns of behaviour that encourage deepening of relationships beyond the till.
Second, strategic HR must work with market researchers so that they conduct their own proprietary independent research to isolate specific local market factors.
Taking the McKinsey findings in their raw form and blindly extrapolating to one’s local market is a recipe for disaster.
Segmenting customers according to demographics may be convenient but it can suck unsuspecting company executives into a dangerous analytic trap; that of equating a customer category with causality.
For instance, being a young urban youth in the 16-34 year age group does not cause a purchase of branded goods and services.
Instead, savvy strategic HR will collaborate with other business functions in interacting with this age group and carry out ethnographic research to uncover what triggers purchase.
Intuitive strategic HR looking at the section of the McKinsey survey that describes 53% of 16-24 year olds as brand-conscious compared to 33% of those in the 45 years and older category will know that there are ‘jobs’ of a psychological and social function that consumers in African markets want fulfilled. For strategic HR that’s the minimum starting point. This leads to the second implication.
Third, strategic HR must use its expertise in culture-building to either establish or deepen the culture of learning ahead of competition. A learning culture means that the business does not house new insights in one or two people, let alone one or two departments.
When there is a learning culture you will see systems that from time to time deliberately relay new insights from sources both within and outside to the entire organisation and facilitate change of behaviour as a result. It is the change of behaviour by every employee as a result of assimilating new insights that constitutes a learning culture.
In the context of this discussion, a Zimbabwean business with a learning culture will feed the insights on the emerging African consumer trends to all layers of the organisation.
The ultimate aim of this exercise is to spark a conversation in the workforce to generate ideas on how best each employee can be prepared to change when the business eventually translates these trends into business strategies.
For example, savvy strategic HR can predict the new types of skills and attitudes future employees need. This might mean advanced skills to navigate social media platforms where the brand-conscious consumers are expected to disseminate information about brands. This might even mean that some jobs may be done efficiently from home, necessitating a radical way in which work is organised and rewarded.
First-movers build brand loyalty
A very useful insight coming out of the McKinsey survey has to do with brand loyalty among participants from sub-Saharan Africa. Brand loyalty for sub-Saharan Africa, just like North Africa, was 58%, meaning that on average, for every 100 Africans 58 stick to well-known brands.
The nuanced difference between the North Africans and sub-Saharans is that whereas the northerners tend to be loyal to a group of brands, those from sub-Saharan Africa tend to be loyal to a specific brand.
Strategic HR has a unique contribution to building brand loyalty through building and sustaining a pioneering culture. Clearly, being innovative alone is not enough. Being innovative and being first-to-the-market is what is likely to build brand loyalty in sub-Saharan Africa.
Strategic HR, through cultural engineering expertise, is able to ensure that employees consistently deliver on the expectations of consumers. Thus by ensuring that an outstanding consumer experience is delivered every time through practices such as communication, performance-reward, culture-based hiring, for instance, strategic HR directly contributes to building brand loyalty.
In Zimbabwe, the findings of the McKinsey survey can be supported from anecdotal evidence. Among several examples, one will be cited.
During the height of hyperinflation, several retail shops sprung to give traditional retail giants, namely OK, TM and Spar, tough competition.
When the Zimbabwe dollar was replaced by the basket of foreign currencies, the traditional retail giants gradually clawed their way back to dominance.
One retail chain that dominated Bulawayo during the hyperinflation era recently folded as consumers were trekking back to the traditional retail giants.
Reflect on it
An HR agenda that is not informed by evidence-based consumer insights has no business relevance.
Chulu is a strategic HR consultant who is pioneering innovative strategic HR practices in both listed and unlisted companies. — email@example.com.