Retail is very huge because it transverses virtually in all sectors from manufacturing to product distribution to meet the final consumers. When retail comes to mind…..we think commerce, groceries, markets, supermarkets, food sellers, fruit sellers, bars etc
It was estimated that between 2008 and 2020, there is a $40 billion growth opportunity in food and consumer goods in Nigeria, the highest of any African nation. Despite the fact that Nigeria’s GDP per capita is $1,443, we believe that formal retail chains have a significant opportunity to capture the growth in this market.
Nigeria’s GDP is growing
Real GDP (2005 based) is growing at an accelerated rate of 7 percent (compound annual growth rate) and is expected to hit $294 billion by 2020 , up from $178 billion in 2012. This compares to a growth rate of just 4 percent in South Africa.
Nigerian households with incomes of more than $5,000 a year will increase from a current 20 percent of the population to 27 percent by 2020, putting them within the target customer base of formal retail chains.
Much of this growth is due to a trend of migration from rural areas toward cities, where job opportunities are more plentiful. Nigeria’s rate of urbanization is one of the fastest in the world, with almost half of the population living in urban areas in 2011 and an ongoing urbanization rate of 4 percent a year. Eight Nigerian cities containing 16 percent of the nation’s population will drive 36 percent of its growth, as per capita consumption in large cities is much higher than in Nigeria as a whole. In Lagos, for instance, consumption is 134 percent greater than the country average.
Kenya, with a GDP per capita that’s only 70 percent of Nigeria’s, has three large retailers (Nakumatt, Tusky’s and Uchumi) with a combined 107 stores and almost $1 billion annual revenue between them. These stores offer not only a standard, formal retail experience, but have also started online shopping. Some are open 24 hours a day.
Intuitively, price is important to the majority of African consumers, but it’s particularly crucial for Nigerians, especially when it comes to food. When choosing a grocery store, 21 percent of Nigerians say they are willing to sacrifice store environment for low prices, compared to 16 percent of South Africans and 12 percent of Ethiopians. As a result, Nigerians are apt to spend a lot of time ensuring they get the lowest prices on groceries. Rice is the top product used as a benchmark for checking prices. Upper income Nigerians also look at red meat and beverages.
Although price is important, some Nigerians prioritize modern shopping experiences. Said one shopper: “[In these modern stores] you don’t have to sweat under the sun just because you want to buy things. This place is well air-conditioned; items are well arranged with their prices, so you don’t need to waste time haggling like in the open market.” Higher income consumers are particularly interested in stores with a wide range of products and a comfortable environment, and are willing to pay for these features. Lower income consumers primarily choose stores based on price offers, but item selection and in-store experience are still important.
Social networking leads as the top reason for internet access on mobile phones, but Nigerians are also using their smart phones for a broad range of activities, including reading news, watching music videos, and doing email and instant messaging. The primary reason Nigerians cite for not using mobile internet is that it’s too slow. Forty-four percent have this complaint. THIS IS AN OPPORTUNITY FOR A FAST INTERNET COMPANY
Residents of Lagos are more than twice as likely to try new things as their peers in Kano (45 percent of Nigerians responded positively to this question vs. 18 percent of Kano residents). Lagos residents are also more price conscious, with 55 percent favoring low prices over a large selection of products, as compared to 20 percent choosing low prices in Abuja and 17 percent in Kano.
In Abuja, only 14 percent of consumers prefer to wear traditional dress over Western clothing. This preference is higher in Lagos (30 percent) and Kano (31 percent).
Residents of Abuja are most likely to view clothes as a statement about who they are, with 64 percent agreeing with this statement, compared to just 39 percent in Lagos.
Retail is every aspect of our lives. Take a look at yourself, visualize what you are wearing and quantify it…..Did you sew the cloth, did made the shoes, did you create the wristwatch, did you create the cufflins, did you even weave your socks or stockings, did you cut your hair or braid it yourself?…..You are a confirmed retail customer. The moment you exchange it for money you become a retailer.
We all are retailers of any kind. Either Retail customer, Retailer, wholesaler, producer. Why? Because you can not own everything. We need others to promote retail. A good retailer must protect the business by managing man and resources. Good employee management is key in an established retail.
Davak Systems & Technology 