MORE South African retailers, especially those in the value space, will seek opportunities in Nigeria in the coming months and years, Broll Nigeria, part of Broll Property Group said yesterday.
“While Woolworths has canned its three-store pilot project in Nigeria, citing a mismatch with the Nigerian consumer and climate … this need not deter South African retailers from profiting in the country.… There is (also) a massive gap in the market for homeware retailers,” Broll Nigeria said.
Despite the score of mall developments under way or in the planning stage, Nigeria, where shopping culture is concentrated in informal markets, currently has just four malls, compared with SA’s 500.
Retailers wanting to prosper will need to develop a country-specific model as the market is highly fragmented, and shopping behaviour and spending power varies.
“Yes, doing business in Nigeria is a challenge. South African retailers should be prepared to change their models for the Nigerian consumer … if you can offer middle-class Nigerians the right price, product, service, quality and choice, the sky is the limit … (and) 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,” Norman Sander of Broll Nigeria, which manages Ikeja City Mall in Nigeria, said.
There is little, if any, brand recognition for South African retailers in Nigeria, where consumers are more familiar with US and European chains. “For fashion, there’s no seasonal shopping — Nigeria is hot year round. Sizes are also important and different to Europe and SA.
“Some 50% of men’s shoe sales are sizes larger than size 10,” Mr Sander said.
Starting with using a cash-based model, rather than counting on sales from accounts or cards is key for retailers planning to enter the market. With the cellphone boom in Nigeria, and an increasingly techsavvy population, digital and social media marketing are effective tools. Mr Sander said Shoprite Holdings was notching up “exceptionally strong” trading at Ikeja City Mall.
The grocer, 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.
According to Shoprite CE Whitey Basson, Nigeria was on the threshold of solid growth in retail, but there was 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. Similarly, Mr Sander cautioned that despite all the opportunity, Nigeria was not for sissies.