Mega malls are revolutionising Nigeria’s retail sector

Nigeria’s retail sector is being revolutionised by the increasing number of shopping malls springing up in major cities including Lagos, Abuja, Port Harcourt, Aba and Kano, analysts say.

Nigeria’s retail sector is being revolutionised by the increasing number of shopping malls springing up in major cities including Lagos, Abuja, Port Harcourt, Aba and Kano, analysts say.

The analysts further say that with the rebirth of shopping malls, consumers’ lifestyle is being redefined, such that there is an attraction to one-stop-shops where several needs are met in the same location, and just as much emphasis is placed on the product, ason the packaging and branding.

Growth of the retail sector is being fuelled by the Fast Moving Consumer Goods (FMCG) sector, which is a direct result of the changing tastes of customers in the consumption of food, beer, soft drinks, as well as personal and home care products that are the primary composition of FMCG, the analysts add.

The December 2014 KPMG Africa report, disclosed that though the Nigerian retail scene remains dominated by informal trade, that was changing, with the entry of supermarkets and the increase in the number of shopping centres.

According to the report “Changes that are occurring with regard to purchasing power, demographics, lifestyle and consumer preferences, are resulting in increased demand for a wider range of products.”

Deutsche Bank Market Research said that, “Nigeria is Africa’s largest alcohol consumer.”

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Based on sales of the world’s largest distiller- Diageo, Nigeria accounts for about 36 percent of Africa’s formal alcohol market.

The report stated further that, “Coca-Cola Nigeria Limited, remains the dominant producer of carbonates and bottled water in the country, due to its long-established history, strong distribution network, and aggressive marketing techniques.

Chi Nigeria Limited, leads Coca-Cola Nigeria Ltd in fruit/vegetable juice, with an off-trade market share of around 45 percent. Competition is intensifying, with innovative domestic companies gaining market share, such as La Casera, which recently introduced the first sugar-free carbonate with real fruit, namely Latina.”

The report added that, “The Nigerian personal care sector is dominated by international brand names. Key players in the industry include Unilever Nigeria, PZ Cussons, Soulmate Industries, House of Tara International, MAC Cosmetics, and Sleek Nigeria.

Mature personal care categories such as general purpose body care and lip gloss continued to grow rapidly in 2012.”

Even stronger growth was seen in developing categories such as shower gels, men’s deodorants, and women’s razors.

“Growth in Nigeria’s home care sector is expected to be robust over the medium term, as consumers continue to switch from (cheaper) general substitutes to products that are task-specific (e.g. switching from using a bar of soap to clean various household items, to using different products to fulfil different needs), in line with rising incomes.

“Other factors driving this market include urbanisation and increased home ownership,” the report summed.

In a recent interview with BusinessDay, Japie Swart, Resilient Africa’s chief operating officer said “The potential of this (Nigerian) market is unlimited and it is relatively immature. We see big international (European) retailers coming here in the next two to three years.

I think Africa is the flavour of the moment and it is only natural for international investors to migrate to the continent.”

With a huge consumer market, growing economy and increasingly urbanised population base, Nigeria represents one of the biggest opportunities for the retail sector in Africa.

Currently, more than 80 million of Nigeria’s 170 million citizens live in or close to urban areas, a figure that is set to rise in coming years, as the economy moves away from its traditional rural base. This shift to the cities, and the rise of a broader middle class, represent a vast pool of customers for retailers.

According to a July 2014 report by research firm, McKinsey Global Institute, Nigeria’s consumption could rise to $1.4 trillion a year, by 2030, from its present level of $388 billion a year, an average annual increase of 8 percent. This rise in consumption would be driven by higher income levels, with the report forecasting 35 million households to be earning more than $7,500 a year by 2030, greatly expanding the middle-income bracket.

This increased affluence is expected to result in 7.1 percent annual growth in sales of food and non-food consumer goods. The rise of non-food goods such as personal care products, will record an even sharper rate of growth, with sales rising by 10.6 percent a year through to 2030, compared to 6.8 percent for food.

Another report prepared by international management consultancy, A T Kearney, earlier in 2014, tipped Nigeria along with Gabon, as offering the best retail investment opportunities in Africa.

Kearney’s African Retail Development Index ranked Nigeria second overall for retail potential, saying it had rapidly evolving retail dynamics and demographics, with many other global retailers planning to set up shop.

April 10, 2015; http://businessdayonline.com/2015/04/mega-malls-are-revolutionising-nigerias-retail-sector/#.VSgANpM-5G0

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