AI and data are reshaping Africa's retail sector

Zawya

10 hours ago

The African retail landscape is under immense pressure. Consumers are more digitally savvy and price-conscious than ever, and expect brands to offer convenience, personalisation, and value.
About half of consumers will switch brands if their expectations are unmet, compelling retailers to continuously innovate and improve.
Industry growth is tapering down across several African markets. South Africa's real retail growth has declined in recent years, constrained by economic stagnation and inflation.
In East Africa, while GDP growth remains relatively strong, formal retail continues to be constrained by infrastructure gaps and logistical inefficiencies.
In response, retailers across the continent are scaling their technology investments to boost competitiveness in an increasingly digital and data-driven industry.
According to Gartner, African retailers are projected to invest $300m in cloud-based enterprise applications in 2025, with an expected growth of 10-12% over the next three years
And yet, many still struggle to translate these investments into meaningful business outcomes. The triple disconnect holding retailers back
1. Fragmented systems, broken processes undermine scalability
Despite deploying multiple best-of-breed applications and investing in a data lake to centralise data, many retailers fail to achieve differentiated customer engagement, real-time visibility and reliability in their operations.
Typical constraints include disconnected systems, a lack of business context within data sets, and AI bolted-on instead being embedded within operational workflows.
A pervasive industry pain point is the disconnected customer journeys caused by fragmented systems and broken processes. To illustrate: a customer may browse a product online, call the nearest store to check stock availability, visit in person and still find a different price to what was listed online.
Or they may purchase the product online but be unable to return the product instore due to a disconnect between online and physical store data.
This is caused when customer data, inventory, pricing, and orders are not synchronised across channels.
And it's not just limited to customer experience - these fragmented processes are widespread across retail operations, often leading to operational inefficiencies and higher costs.
At the root of this problem is a disconnected application landscape.
In fact, 66% of organisations say application sprawl and complexity hinder their digital goals, resulting in process inefficiencies and a lack of reliability in retail operations.
2. Data is an opportunity, but a challenge too
African retailers are sitting on mountains of data spanning point-of-sale systems, loyalty platforms, mobile apps, and third-party sources.
But is this high volume, variety, and velocity of data being leveraged effectively to drive business outcomes?
Unfortunately, the answer is no. Around 55% of business leaders cite poor data quality and fragmentation as the biggest obstacles to making data-driven decisions.
Moreover, a disproportionate amount of time is spent on data management and building dashboards as against decision-making, underscoring the urgent need for more efficient processes.
3. AI without a solid foundation doesn't scale
While there's palpable excitement in boardrooms over the potential and power of AI, execution remains limited. One study found that nearly three-quarters of organisations are struggling to scale AI projects beyond pilot projects.
African retailers face even greater challenges, including poor-quality data, outdated IT infrastructure, and a lack of AI-ready processes.
The result is AI initiatives that turn into isolated experiments that fail to deliver any meaningful ROI. Instead, retailers need to leverage a unified data platform that embeds AI directly into their business processes to scale AI initiatives effectively. The power of a unifying platform
Leading retailers leverage a comprehensive, connected, and industry-specific suite of applications to confidently execute across their value chain. This helps ensure a consistent and reliable customer experience, minimising stock-outs, enabling fast, on-time delivery and delivering a seamless omni-channel journey.
This reliability extends across store operations, finance, and support processes.
The SAP Business Suite, for example, enables this efficiency through automation, actionable insights, and process optimisation, while the SAP Business Data Cloud provides seamless access to organisational data.
Retailers also benefit from deep industry expertise and global context that helps them identify the correct application mix for integrating, harmonising and transforming business data across various applications.
This also provides the foundation to scale AI effectively across retail operations through unified, context-rich data that brings together sales, inventory, promotional, customer behaviour and other data.
By connecting end-to-end processes, retailers can also embed AI and enable seamless cross-functional workflows while leveraging innovations from a rich ecosystem of partnerships.
Retailers leveraging SAP's connected platform and AI capabilities report a 20-30% reduction in customer churn, 30-50% fewer stockout, an up to 40% increase in workforce productivity and 20-30% reduction in IT spend.
Realising Africa's data-rich, AI-powered retail future requires bold steps to shift beyond legacy systems and redefine operations. By utilising a powerful business suite, retailers can unlock new end-to-end capabilities that bring together applications, data and AI for unrivalled competitiveness.
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