Retailers groan over poor sales as recession bites

It is not the best of times for retailers in Nigeria as there appears to be no end in sight to the lingering harsh business conditions they are face with as a result of the weakness of the naira against the dollar which has greatly inflated the prices of all imported items leading to a record low in sales. The current economic slowdown being experienced
in Nigeria has also forced a good number of mall operators to retrench some of their staff while those who could not stand the heat have closed their shops permanently.

BusinessDay recent survey reveals that 90 percent of the consumers in the shopping mall are either window-shopping or heading to the cinema ‘‘When you see a huge crowd around the mall, it’s easy to think that we are recording more sales but that is not the case. Most of these people hardly come inside our stores. If they are not going to see a movie, they are taking pictures. We are making little or no sales,’’ Adeyinka Saka, a manager at Maybrands in Ikeja shopping mall told BusinessDay. The inflation rate rose to 17.9 per cent from 17.6 per cent in August, the National Bureau of Statistics (NBS) said on October 14. This recession has really affected us a great deal. We import all our goods and because of the dollar rate, our prices had to go up.

Most of our consumers are complaining but our hands are tied because there is little we can do”, said Rachael Atunrase, Manager at Essenza, a perfumes and accessories shop in Apapa shopping mall in Lagos. Atunrase acknowledged the fact that they are witnessing low patronage but expressed confidence that business will bounce back before the year ends. Few mall operators who spoke with BusinessDay expressed fears over the prolonged low sales which they say is seriously hurting their businesses. “Our sales have drastically reduced, the harsh economy is really telling on us. This year has been so horrible for us, some days we don’t even sell an item, it’s that bad. The past month (october) is usually when we hit our highest sales in the year but this time, we did not even reach a quarter of our target. “To encourage customers to buy from us, we are offering 7-12% discounts depending on the worth of items purchased. With this sacrifice on our part, customers are not still buying”, Adeyinka Saka, manager at Maybrands, an accessories shop in Ikeja City Mall complained.

BusinessDay findings at Park Place, a fashion and beauty mall around Lekki Admiralty way showed that consumers were not interested in beauty items at the moment. “I can count how many items I have sold since I moved into this mall, business is not good at all. Most people are not thinking much about fashion, although we get few customers once in a while but it’s been tough. You can see how empty the entire mall is but we hope business will improve with time”, Gloria Uwaka, Manager at Steps Exclusive told BusinessDay. Amarachi Maduka, Assistant Manager, at an accessories shop in Festac shopping mall who could barely hide her worries said, “We have never seen such poor sales since we started this business, it’s been terrible. I hope this challenge in the economy fades away soon if not, we won’t have businesses to go to. I’ve seen some shops that could no longer cope, closed up. Some have even sacked most of their staff. If we are not making sales, how do we pay staff salary and also the rent for the shop? Maduka queried. “Business has been poor generally, we are barely managing. There is no money in circulation; maybe government should consider pumping in more money because customers keep complaining that they don’t have money to shop. We are not impressed at all”, Hannah Samuel, sales supervisor at Goodies supermarket lamented. As retailers continue to wait for business to return to usual, experts say this will be an appropriate time for them to begin to source their materials locally, to enable them offer the right prices for their products as way of surviving the turbulent times. ‘‘Source for local raw materials within Nigeria instead of importing because you don’t have access to foreign exchange or the income you are generating cannot provide FX for you.

‘‘Consumers have become more conscious, more concerned and conservative because of the state of the economy and they are likely going to proactively search for savings. They will remain brand loyal only if the price is right,” said Temitope Oshikoya, CEO/Chief Economic Strategist, Nextnomics. Bukky George, Founder & CEO, Healthplus & CasaBella, advises against passing on all the cost incurred on the consumer insisting that the pricing has to be right. “The recession is real. The economy is rough and tough and Nigerians are broke. Wages have been stagnant. If you don’t price right, your margins can disappear. If you overpass the extra accost on your customer, then you chase them away,” George said. Ibukun Awosika, Chairman, Board of Directors in First Bank of Nigeria said retailers need to develop the right mind-set if they desire to survive the present economic challenge. “The reality right now is that the buying power of every consumer has depreciated. Most people do not have as much disposable income available. In the market where people are losing jobs, were inflation has risen in a high double digits, retailers have to find how they can reach their consumers who has no capacity to absorb the increase cost in their business by finding the alternative to their product within the same category before their competitor beats them to it,” Awosika said