In­for­mal re­tail­ers in Nige­ria: An un­tapped mine of op­por­tu­nity?

De­spite the eco­nomic re­ces­sion, the Global Re­tail De­vel­op­ment In­dex says Nige­ria's re­tail sec­tor made a na­tional sale of N38 tril­lion ($125bn) in 2016, the high­est re­tail sales in Sub­Sa­ha­ran Africa in that year.

Financial Nigeria Magazine - - Contents - By Vic­to­ria Smart Vic­to­ria Smart is Mar­ket­ing Man­ager, Clar­ion Events West Africa

For a long time now, there has been grow­ing in­ter­est in Nige­ria as a fast grow­ing African na­tion. La­gos state alone is now the sixth (6th) largest econ­omy in Africa worth $131 bil­lion GDP and third (3rd) largest mega city in the world be­hind Mum­bai and Tokyo. The pace of this growth has been as­ton­ish­ing and mir­rors the growth of the coun­try it­self, with the Nige­rian GDP rock­et­ing from $166 bil­lion in 2006 to $296 bil­lion in 2017; mak­ing up around 20% of the GDP for the en­tire African con­tent. This growth is de­spite a fall in GDP over the past cou­ple years due to the se­vere drop in crude oil prices.

The fig­ures speak for them­selves. There is no ques­tion about the wealth of op­por­tu­ni­ties for growth and in­vest­ment in the Nige­rian econ­omy; it is more a ques­tion of which sec­tors to in­vest in. Nige­ria has a thriv­ing tele­coms in­dus­try and gov­ern­ment is work­ing hard to sup­port ar­eas such as man­u­fac­tur­ing and in­fra­struc­ture; how­ever one sec­tor of par­tic­u­lar in­ter­est is re­tail.

With a mid­dle class that ac­counts for ap­prox­i­mately 23% of the pop­u­la­tion and is es­ti­mated to have a com­bined buy­ing power in ex­cess of $28 bil­lion, as well as more and more large brands en­ter­ing the Sub­Sa­ha­ran mar­ket through Nige­ria (UK Toy shop Ham­leys be­ing one ex­am­ple), the re­tail mar­ket has made sig­nif­i­cant leaps and is still grow­ing; fast. De­spite the eco­nomic re­ces­sion, the Global Re­tail De­vel­op­ment In­dex says Nige­ria’s re­tail sec­tor made a na­tional sale of N38 tril­lion ($125bn) in 2016, the high­est re­tail sales in Sub-Sa­ha­ran Africa in that year.

For­mal re­tail­ers are gain­ing ground in the Nige­rian mar­ket through for­eign in­vestors, such as the South African big-box chains Sho­prite and Game. The num­ber of malls in La­gos has also in­creased over the past 12 years since the open­ing of the firstever Nige­rian Mall, Palms Shop­ping Cen­tre, in 2005.

How­ever, it is im­por­tant to re­al­ize that 95% of the re­tail mar­ket is still in­for­mal, and this sec­tion of the mar­ket pur­chases and sells more home­ware and gift­ware items than all the big re­tail­ers com­bined, an es­ti­mated N1 bil­lion each day.

Both these in­for­mal and for­mal re­tail­ers are see­ing a marked in­crease in de­mand for in­ter­na­tional prod­ucts from con­sumers that have in­creased buy­ing power and want in­ter­na­tional brands, thanks to in­ter­net and so­cial me­dia aware­ness. A large chunk of the sec­tor, around 40% of these, do not cur­rently travel to at­tend any large in­ter­na­tional re­tail fairs, leav­ing com­pa­nies from coun­tries such as China, In­dia, Turley, In­done­sia, Ja­pan, Italy and Tai­wan with no al­ter­na­tive but to start pen­e­trat­ing the mar­ket at a lo­cal level by send­ing reps to meet di­rectly with this mas­sive num­ber of buy­ers.

In re­sponse to this in­crease in de­mand and the un­tapped op­por­tu­ni­ties of the in­for­mal seg­ment of the mar­ket, the Re­tail Coun­cil of Nige­ria (RCN), Na­tional As­so­ci­a­tion of Mar­ket Women and Men of Nige­ria (In­for­mal re­tail­ers as­so­ci­a­tion) and Gov­ern­ment agen­cies have teamed up with a lo­cal ex­hi­bi­tions or­gan­iser with in­ter­na­tional reach (Clar­ion Events West Africa) to or­gan­ise the home dé­cor and gift­ware Nige­ria expo.

“The for­mal re­tail mar­ket has wit­nessed un­prece­dented growth in re­cent years largely ow­ing to the in­jec­tion of in­ter­na­tional brands from coun­tries such as China, In­dia, Italy and UK into the Nige­rian mar­ket. RCN Mem­bers are ea­ger to make new con­nec­tions with in­ter­na­tional man­u­fac­tur­ers and net­work with stake­hold­ers from both the for­mal and in­for­mal mar­ket”, Asi­waju Solomon Kay­ode Onafowokan, Pres­i­dent, Re­tail Coun­cil of Nige­ria, Chair­man, Chel­larams plc and Past Pres­i­dent, La­gos Cham­ber of Com­merce and In­dus­try (LCCI).

The ex­hi­bi­tion, set to hold from 14 – 16 Novem­ber, 2017 in La­gos, Nige­ria has al­ready gained in­ter­na­tional sup­port with con­firmed Coun­try Pav­il­ions from South Africa, Turkey and In­dia. Over 4000 in­for­mal and for­mal re­tail­ers are ex­pected to at­tend to meet with 100+ in­ter­na­tional and lo­cal sup­pli­ers and dis­trib­u­tors of home­ware, fur­nish­ing, in­te­rior dé­cor, tex­tile and gift items.

Food re­tail­ers

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