Nigeria?s burgeoning retail sector has the potential to create jobs and grow the economy exponentially within a short space of time and as such must be properly nurtured and encouraged, industry stakeholders have said.
This is just as foreign retail chains scramble for a foothold in the Nigerian market and South African brand, Shoprite prepares to open 700 more outlets across the country in the coming years.
Stakeholders at a BusinessDay Retail Conference in Lagos yesterday, however listed some of the challenges affecting retail business in Nigeria, as including logistics, distribution, power, funding and a dearth of skilled manpower and security issues, among others.
Joboy Christmas, manager corporate sales, Promasidor, said due to the viability and growing acceptance of retail business in the country, South Africa?s Shoprite plans to open about 700 outlets in the country in the next five to ten years.
This is so because they have increasingly warmed their way into the hearts of Nigerian consmers.
Juliet Anammah of Accenture in her presentation at the conference revealed that the retail sector contributes 19 percent of Nigeria?s GDP. She further observed that thinning margins in the developed economies, as well as slow economic growth have made the search for new markets imperative. Nigeria and Morocco, according to Anammah, have drawn the attention of retail giants like Walmart.
Anammah estimates that by 2020 Nigeria?s expenditure on non-durable goods will be N13 trillion naira; the agriculture, financial and real estate sectors are expected to be beneficiaries, as capital accumulates and the retail sector evolves. Inadequate logistic; limited access to credit for micro businesses and the slow adoption of online payment may delay this evolution, but it won?t stall the emergence of multiples of local and foreign retail businesses, she added.
Olumide Akindele, Diamond Bank?s head of Proposition Liabilities, said Nigerian banks lack the expertise to support retail outlets and as such, very few banks were in the business of funding retail outlets.
Diamond Bank has identified this gaping vacuum and has moved to fill it, Akindele said.
He added: ?We have done well to create SME programmes targeted at financing upcoming and established retail outlets.
This is evident in the capital, to the tune of N147.2 billion injected by the bank into the growth of SME?s in Nigeria in recent times.?
Olusola Owuro, Lagos State Commissioner for Commerce and Industry, in a brief opening address, offered that Lagos was open to business and willing to learn from the private sector. The state, according to her, wants to alleviate poverty and promote sustainable economic development.
The variety and quality of consumer goods in the Nigerian retail market are rising, while prices are falling, as global mega stores including Shoprite, Spar and Game penetrate the sector, following the exit three decades ago of former market leaders such as Leventis , Kingsway and UTC stores.
Industry watchers say the coming of the foreign mega stores is spurred by expanding markets and political stability in parts of sub-Saharan Africa, including Nigeria, as well as thinning margins in Europe and the US.
The expansion in the Nigerian market is attributed to the country?s growing middle class, which earns between N75,000 and N100,000 monthly, and now accounts for up to 23 percent of the national population, according to a study by Renaissance Capital.
A report of the study which relied on data by the African Development Bank put the average income per annum of this group at between N1 million and N1.2 million ($6,000 ? $7,000).
The growth in the middle class size in Nigeria, follows the pattern in the rise of the country?s national income. For instance, Nigeria?s Gross Domestic Product (GDP) increased five-fold from $46 billion in 2000, to $247 billion in 2011, while GDP per capita has increased to about $1,600.
Similarly, the country?s population has increased by about 33 percent during the same period, rising from 119 million to the current estimated 160 million.
According to a survey by Neilsen, a leading global provider of information and insights into consumers? behaviour, Nigerian consumers spend more on consumer packaged goods than other African countries.
As the most populous country in Africa and the second largest economy in Sub-Saharan Africa, Nigeria?s growing middle class and consumer spending have made it an attractive destination to investors with keen interest in emerging markets.
Neilsen?s insight into the country?s market would further reinforce investors? appetite especially for those with interest in consumer packaged products.
?Nigerians earn more and spend more on consumer packaged goods (CPG) products than the African average,? the report has stated while noting that the middle and high income consumer segments which it categorised as Trendy Aspirants, Balanced Seniors and Progressive Affluents account for over 50 percent spending on CPG which is significantly higher than the Africa average of 45 percent.
According to the report, Nigerian consumers? spending patterns are influenced by traditions, family and the desire to maintain high standards. Of the seven consumer segments identified in the survey report, the family, affordability of the commodity, as well as trust in the same brand were common factors that determine consumption in the country.
It noted that 37 percent of total monthly household spending of Nigerian consumers go into food, personal care, and household products, while they often prefer tested products that are affordable and easily available.
About two decades ago, outlets such Leventis, Kingsway and UTC stores dominated the Nigerian retail market but then folded up. Tajudin Olufadi, an analyst at Renaisance, said the simple reason why most of them are no more is because they became too complacent, as they allowed themselves be tagged as being for the rich, so they failed to re-strategise by changing their business models and developing systems that would help them remain competitive.
Article source: http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/42486-stakeholders-look-to-retail-business-creating-jobs
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