The future is retail
Irecall with great nostalgia the article I wrote in 2008 titled the future of banking is retail. I wrote that article as an industry expert to correct the impression that corporate or big-ticket transactions, though a fast track to achieving the bottom-line (profitability essentially), are less essential to building a mass of sustainable retail customers. Today, my thought has been vindicated. Banks that pride themselves as corporate banks are now seriously involved in the retail banking drive. I know of two banks that had a minimum opening balance of N250,000 for their savings accounts in the early 2000 but now open accounts (including NYSC accounts) with zero balances.
In every business or segmentation, the retail end is crucial to success. The mass market has been proven to be a consistent source for the generation of sustainable business patronages and performances. Let us take Banking and the FastMoving Consumer Goods (FMCGS) as a case study. In banking, the retail segment will give any bank a stable and reliable low-cost deposit for lending and investment activities. As stated in my book, the value chain banking (a practical guide to winning customers’ business and loyalty), building a critical mass of retail customers guarantees deposits and provides lending avenues to the financial deficit segments of the economy. The retail loan portfolio if well-built and managed, will produce a consistent return on risk assets, though with a high risk of default if not well monitored. In such a case, the efficacy of underwriting and collection architecture is essential to guarantee the stakeholders’ fund and commensurate returns on investment.
In my consulting sojourn in the FMCGS sector, the focus on retail and consumer strategy is justifiable. The product development, the route to the market, brand activation, advertisement, value chain ecosystem and sales force management are all centred on the retail end where the creation of critical mass and momentum guarantees strong brand awareness and returns on investment. For instance, an FMCG company might use the end of the year or period incentives to offload its products into the warehouses of the distributors and record such sales to increase her reported turnover. But this strategy has failed many companies because the consumers’ patronage from the distributors for the period is not on the trend to the ‘north’. The distributors will end up losing the incentives to high stock holding costs. In essence, the retail end of the spectrum is a crucial bucket for business success and survival.
The protest was a product of the neglect of the retail element of Nigeria’s population and national life. Nigeria’s population is with a considerable number of youths that have been hampered by the corruption of our leaders, lack of institutions to curb corruption and dysfunctional political system and structures. We have produced leaders that are wealthier than the state they governed and yet, they still collect pensions equivalent to the salary of a sitting governor. We have enriched the pockets of people for doing nothing except vying for political offices. We have given out the national wealth as security votes and community projects without strict accountability. Unlike China and Singapore that use their youthful population to their advantages, Nigeria youth have been crippled in enormous opportunities. Thanks to the ‘legislooters’ ‘execustealers’ and impacts of the mistake of 1914.
Our youths’ productive capacity being utilised in the protests could have been channelled to productive ventures. Not that the protesters do not have work, but they needed a change that could help the future of this country. Our government has abandoned the mass market of the population, which should preferably be an advantage. I am sure the youth’s productivity capacity would have been better harnessed except for Nigeria’s peculiar lousy leadership and governance.
Therefore, we need to put a focus on our retail spectrum, be it in public, or private and the governance sector. The building and leading of a country to self-sufficiency and realisation of national potential is a business. It is not politics! In the business economy, the wellbeing, patronage, and interest of the retail consumers are paramount to the success of the products or brand. They are a segment of the stakeholders that have the power, interest, and influence on the company; they cannot be ignored forever. One day, they will wake up and cause disruption peacefully, violently and in an extreme case, revolutionarily.
I had a recent experience to show how the critical mass of the population or customer base has been unattended to by a publicly quoted company. I did a transfer of N16,000 to a wrong beneficiary in another bank in October 2019 when I got the shocking news of the demise of Oloto Taiwo Hassan, a man who lived his life for others including me. I know it was my mistake and waited patiently for the two leading Nigerian banks to resolve this and refund my money.
These banks are in the top 5 if not 3 rankings in this country. I would like to protect their brand now. After several attempts and with the same answer, the recipient bank has not refunded the initiating bank. I gave up and no contact was made for several months. I was told that the process of recalling the wrong NIP (a name for the interbank transfer) is open-ended and without any turn-around time. Until my wrong beneficiary accents to the refund, nothing can be done. Unfortunately for initiating bank, I know the fund is on lien and in the beneficiary’s account. He is willing to return my money, but a systemic failure has tied down my fund for 365days within the system. Imagine that was my one-month salary? Or do they think the money is another unclaimed dividend? I will give the initiating bank another one year before taking the case to the next level as an action from a responsible advocate for others who are without a voice or a pen.
If one million Nigerians have a similar experience, what would be their trust in the financial system? This is a clarion call for the CBN and other consumer protection agencies to institutionalise a fortified system to protect the retail segment of every market. The cumulative, consistent and stable contributions of the retail segments is more important than the one-off impact of the so-called ‘big tickets’ customers.
For the political leaders, your retail segment performance indicators are in provision of quality public school education, improving the healthcare system, providing good road networks and an atmosphere where the children of nobodies can become somebody without favouritism, nepotism or ascending to any political office.
The future of every business or country is, therefore, in the retail space - the critical mass market where the critical mass of empowerment, national development, revenue and products sales are guaranteed overtime.
The protest was a product of the neglect of the retail element of Nigeria’s population and national life. Nigeria’s population is with a considerable number of youths that have been hampered by the corruption of our leaders, lack of institutions to curb corruption and dysfunctional political system and structures