Will SA retailers follow Woolworths and pull out of Nigeria?

Will SA retailers follow Woolworths and pull out of Nigeria?

Thursday, 12 December 2013 13:35 Published by eProp Commercial Property News
In fact, Broll expects more South African retailers, especially value retailers, to seek opportunities in the Nigerian market in the coming months and years.

“Yes, doing business in Nigeria is a challenge. But if you can offer middle class Nigerians the right price, product, service, quality and choice, the sky is the limit,” says Norman Sander of Broll Nigeria, who manages Ikeja City Mall in Nigeria.

South African retailer Shoprite is notching up exceptionally strong trading at Ikeja City Mall, according to Sander.

Sander says South African retailers should be prepared to change their models for the Nigerian consumer. If they do so, they stand to gain a firm foothold in a marketplace in a country where consumers are brand loyal and value good service, which is in short supply.

He adds the Nigerian market is vastly different from that of South Africa and its neighbouring countries. “Research is essential to understanding this unique set of consumer needs and norms, before venturing into this exceptional territory.”

Broll is increasingly being called upon for its professional property services and insights to support retailers and property owners alike seeking to unlock the many retail opportunities in Nigeria.

“The market and spend needed for retail success is here and growing. Retailers wanting to crack this market need to customise their models to meet the unique consumer needs and aspirations,” says Sander. He also notes the call of the mall is gaining the support of more Nigerian shoppers.

“Nigerians enjoy a first-world shopping environment that is pleasant, safe, cool, unrushed and offers a complete retail experience from shopping to relaxing at the food court. Mall dwell times are increasing and foot counts are growing.”

Sander offers a few suggestions that Broll has picked up for retailers planning to enter the Nigerian market, starting with using a cash-based model initially, rather than counting on sales from accounts or cards.

He explains that there is little, if any, brand recognition for South African retailers in Nigeria, where consumers are more familiar with US and European retailers. This requires a marketing strategy that goes beyond advertising store opening and extends to launching a new brand.

The markets’ buying patterns are also different to what South African retailers are used to.

For fashion, there’s no seasonal shopping – Nigeria is hot year round. Sizes are also important and different to Europe and South Africa. Some 50% of men’s shoe sales are sizes larger than size 10. And, while there’s a market for luxury goods, prices that are noticeably above those of Europe won’t be tolerated.

With the mobile phone boom in Nigeria, and an increasingly tech-savvy population, Sander says digital and social media marketing are effective tools for retailers.
“Offering guarantees and sticking to these promises is a tremendous way of growing customer loyalty,” says Sander. “We’ve also found that give-away events enjoy great participation at Ikeja City Mall. At first journalists were genuinely surprised to find that these were fair and above board.”

Despite all the opportunity, Sander cautions that retail in Nigeria is not for sissies. “Mall rentals are high because of infrastructure and development costs which, in turn, demands high turnovers. Infrastructure is poor, red-tape is plenty and officials often interfere. The supply chain also takes far greater focus, with a host of potential obstacles to be navigated.”

Sander explains that retailers will need excellent warehousing to overcome shipping issues in Nigeria, where goods don’t move as fast as they do in South Africa. “The choice of clearing agents is important and there is often a price attached to clearing goods,” notes Sander. Yet, with all these challenges, Nigeria’s retail opportunities keep on growing on the back of mass urbanisation, the emerging middleclass, rising retail awareness and an increasing consumer culture.

“For retailers who are prepared to develop a country-specific model and invest in research to support a supply chain, the right stock, the best price and service, there’s a bright future in Nigeria,” says Sander.

He adds that right now there’s a massive gap in the market for homeware retailers.

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Posted on December 12, 2013, in #retail, #southafrica. Bookmark the permalink. Leave a comment.

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