What is Ghana’s Largest Retailer Up To?
Why Melcom’s discount loyalty cards might contain the seeds of a powerful cross-merchant retail platform.
It’s been an interesting few years for Ghana’s retail players.
Here’s a brief recap of recent happenings in Ghana retail
First, multiple malls opened their doors including Accra Mall, Achimota Retail Center, Marina Mall, and West Hills Mall (West Africa’s largest mall). The anchor tenants for this new commercial real estate include global heavyweights such as Walmart, via their Massmart subsidiary which owns the Game store brand.
In Ghana, just like everywhere else on the continent, Walmart is battling South African juggernaut Shoprite, Africa’s largest retailer by sales.
Meanwhile, Rocket Internet’s family of e-commerce companies began operating in multiple verticals, including food, travel, and real estate, Tonaton became Ghana’s largest classifieds site, Swiss media conglomerate Ringier got in the game with discount site Tisu, and home-grown startups like Storefoundary are making it possible for Ghanaian merchants to come online for the first time.
Again: it’s been an interesting few years.
About Melcom
Melcom is arguably Ghana’s largest retailer. The company was founded in 1989 by Indian expat Bhagwan Khubchandani, and the story of how the company came to be makes for fascinating reading. Melcom is undeniably a Ghanaian retail institution.
Despite being one of the largest players in Ghanaian retail, Melcom is unlikely to come up when people discuss the most exciting new things happening in the space. But I saw something recently that makes me believe that the grand-daddy of Ghanaian retail is stirring.
What happened?
A few weeks ago, while in the checkout aisle at my local Melcom in East Legon, the checkout person asked if I had a Melcom Super Saver loyalty card, and if I wanted one. When I said no, she was so insistent that I agreed to get one just so I could leave in peace.
At the time, I remember thinking that 1) she had been oddly intent on me getting the card 2) the card was surprisingly sturdy and relatively well-designed. I remember thinking that it had the re-assuring heft of a new debit card.
The Melcom Super Saver card gets you 5% off Melcom products on orders of over ~70 Ghana Cedis.
This is the Melcom store in East Legon neighbourhood of Accra.
Across the street, there’s a smoothie shop called NourishLab Smoothy’s.
While walking into Smoothy’s recently, I noticed this new sticker on the door.
It took me a second to understand what I was seeing — I could use my Melcom card to get a discount on Smoothy’s orders.
There’re constraints, of course: the 5% discount applies only to smoothie orders, and nothing else on the menu. Regardless, this is a fascinating move by Melcom.
Let’s think through some of the implications.
The Melcom Discount Card has become a LOT more valuable than the loyalty cards of competing retailers
Other retailers in Ghana such as MaxMart and Palace have loyalty discount card programs as well, and while I keep their cards in my wallet, I’m equally as likely to leave them at home. But with this move by Melcom, I now find myself double-checking that the Melcom card is with me before heading out of my apartment.
Melcom probably has access to purchase data of other Ghanaian retailers
For Melcom cards to be acceptable at Smoothy’s, I assume the systems of both companies must be integrated to come extent. The next time I use my Melcom card at Smoothy’s, Melcom will know:
- how much I usually pay at Smoothy’s
- what specific smoothies I order
- how often I visit the store and at what times
Now aggregate this info over multiple hundreds of people, and let’s assume that more retailers sign onto the program. Melcom would have a sense of:
- hourly/daily/weekly/monthly foot traffic at various locations all over Ghana
- gross revenue of various companies
- the most popular products (eg. smoothie flavours) at various companies
This mimics the kind of data that Point-of-Sale company Square collects from thousands of businesses all over the United States of America. For example, Square mined their data to reveal the average cost of a haircut across the U.S.:
Square also used their data to understand rent payment habits across the U.S.
And here is Square showing exactly how average bar sales across the U.S. change per hour during an average day.
What can Melcom do with this info?
Again, let’s assume that Melcom partners with lots of companies and gets a lot of great data. What are some things it can do with this data?
- When Melcom leadership is deciding where to open new store locations, foot traffic data from their partners might reveal underserved areas and hidden real estate gems (read: less pricey rent)
- Let’s take the specific example of smoothies. If Melcom was ever interested in opening a complementary (or even competing) business, they’d have a sense of what smoothie flavours are most popular in various parts of Accra. Same with other product types.
- The raw data they generate might be useful to third parties. For example, Broll (one of the largest property management companies in Ghana and elsewhere in Africa) might be interested in Melcom’s foot traffic data when deciding on new developments, or when reviewing rents for existing tenants.
Why would a company partner with Melcom?
At first blush, this seems like an insane amount of data for a company to make available to Melcom. Why would Smoothy’s or any other company agree to this?
I see a number of reasons why this makes sense for both parties. As one of Ghana’s largest retailers, Melcom enjoys a scale unrivaled by anyone else. Assuming Melcom representatives are successfully signing up hundreds of card holders every day, that’s a lot of people who might try Smoothy’s for the first time because of the promise of a small discount. And if they’re already-existing Smoothy’s visitors, they’re now more likely to stay loyal to Smoothy’s versus visiting any of the other smoothie places opening up.
Finally, I also assume that Melcom is paying Smoothy’s for this program, or at the very least, covering the cost of the discount.
What further opportunities exist?
I’d love to understand what Melcom’s strategy is here, and how local startups can provide value.
For example, Loystar is a Ghanaian/Nigerian team whose solution allows merchants to set up SMS-powered loyalty programs in minutes. Amongst other things, Loystar lets merchants quickly send messages to their customers via a convenient mobile app. Is there an opportunity here for the two companies to work together?
Amplify helps African companies accept and manage recurring payments online. The startup is currently open to Nigerian merchants, but when they inevitably launch in Ghanan, can they power a subscription delivery service for the retail giant?
Tress is a hairstyle discovery and inspiration app for black women. The team (another Ghana/Naija collaboration) eventually plans make it possible for their thousands of engaged users to buy hair products right from inside the app. What if women were able to find a specific look inside Tress, purchase the relevant hair extension or creams inside the app, and then swing by to pick it up conveniently from the Melcom closest to them?
What happens next?
To be clear: I don’t know how many merchants Melcom has signed up to this project, and I have no idea what plans they have for it.
But I am very encouraged by this early experiment.
Big thumbs up to whoever it is at Melcom who is leading this, and major props to the rest of the Melcom organization for giving the go-ahead for this kind of experimentation. It’s definitely put the company on my radar.
In this recent interview with Mr. Khubchandani, Chairman of the Melcom Group, it’s clear that Melcom is wide awake to the growing competition and isn’t going to stand by and be disrupted. The Melcom Group of Companies includes a manufacturing company, a food company, and in the interview linked before, Khubchandani mentions that they’ve flirted with the idea of going into savings and loans. This is a company that intends to be around for a long time.
I hope that as the platform evolves, Melcom reaches out to the members of the local technology and business community and invites us to integrate and build on top of it.
If you’re at Melcom and would be open to chatting about this project and other tech initiatives at the company, please do reach out at equartey@gmail.com.
