Money & Investing

an expectation that Africans elsewhere will be familiar with the brands.

This is not the case. Nigerian consumers are brand-savvy. If they are going to pay higher prices for goods, they want global brands they recognise; brands that tap into their aspirations. Woolworths and some of SA’s other clothing retailers simply do not fit into that category, she says. The Foschini Group has two stores in Nigeria and Truworths four.

Games adds that wealthy Nigerians who travel and favour shopping haunts in the UK and US are more familiar with the down-market Woolworths brand in the UK that went out of business a few years ago than the more up-market local brand.

“When entering Nigeria, you have to start from scratch with brand building 101: great product at the right price, in the right location, delivered by the best people,” Layzell says.

Shoprite, which has seven stores in Nigeria, has partnered with Resilient Property Income Fund to build 10 malls in the country. The deal, worth more than R1bn, also involves Standard Bank and Group Five.

Like other SA stalwarts Famous Brands, Mr Price and Pepkor, Shoprite has enjoyed success in Nigeria, but at a protracted pace, still marred with myriad impediments.

Its value but budget-conscious offerings, which appeal to a cost-sensitive but rising middle class and low-income Nigerian consumer, are being made available outside malls, whose rentals are being driven up by risk factors, undersupply and greed.

“After an extended period of volatility, a considerable measure of peace and stability has returned to much of West Africa. We believe Nigeria is on the threshold of solid growth in retail. At the same time, there is a long road ahead in realising the country’s retail potential as the infrastructure is simply not available to sustain the desired level of growth,” Shoprite CE Whitey Basson says.

Mr Price CE Stuart Bird says: “It’s not easy. But there is big potential. We still need to improve our value offer in Nigeria. The more we do that, the more we are going to be able to tap into a broader market.”

The cheap and chic retailer’s test stores in Nigeria and Ghana achieved a double-digit operating margin within the first year.

Gopaldas says investors should expect periodic bouts of uncertainty and stress in the financial and political system, which is inherent to doing business in Nigeria.

It’s important to take a longterm view on the country because one doesn’t want to close shop before the business actually takes off. Nigeria is a lucrative market, one which is too vast and important for investors to ignore, he says.

In Nigeria, like other markets, there are no short cuts to success. The message is clear: pay your school fees, have patience and wait for your rough diamond to be polished.

Zeenat Moorad mooradz@bdfm.co.za

@zeenatmoorad