Nigerian retail operators have been urged to reposition the sector to offer cost-effective consumer engagement. This is against the background of recent reports by the National Bureau of Statistics (NBS) and Euromonitor showing a steady dip in household consumption year-on-year.
According to the NBS report published in June, household consumption slumped to a 12.4 percent negative in the fourth quarter of 2022, compared to a 7.30 percent growth recorded within the same period the previous year.
Euromonitor, the global strategic market research company, also disclosed that modern retail transactions declined 5.42 percent in 2021, the lowest in five years.
Speaking on the issue during an interaction session with the press, Ade Sun-Basorun, Chief Executive Officer of FoodCo Nigeria, a diversified consumer goods company with interests in retail, quick service restaurants, manufacturing and entertainment, noted that sector players must prioritize affordability, quality assurance and accessibility to remain competitive amid the increasing demand on a shrinking consumer wallet.
He said: “We are experiencing a tough economic cycle that has contracted consumers’ purchasing power and is consequently having a direct effect on the organized retail space. Now, more than ever, we have a consumer class that is particularly price-sensitive so it is up to operators to innovate around systems and processes to deliver retail services at the lowest prices possible.
“Equally as critical is the need to elevate the bar on the quality and value of products and services on offer. The proliferation of fake and sub-standard products has been a long-standing concern in the consumer retail space and the modern retail segment must take the lead in ensuring that things are done properly and to approved quality standards in order to retain the attractiveness of the sector.
“Furthermore, modern retail needs to get closer to customers and also provide an access channel for the ever-burgeoning set of producers developing products. While the present economic climate may be a disincentive for investments in malls and similar big-sized outlets, the physical shopping experience remains an integral part of modern retail. So, operators should consider investing in neighbourhood stores which will bring the service closer to consumers,” he added.
Speaking on the role of government in ensuring the sustainability of the sector, Sun-Basorun avers that, “like many other businesses, modern retail relies on government for infrastructure, for efficiency in the collaboration across agencies, and for the effectiveness of taxation across agencies.
All of the ongoing efforts around improving infrastructure, improving access to power, improving access to FX, improving or simplifying the regulatory environment, all of those directly benefit us much like it does all other businesses in the country.”
Established in 1982, FoodCo is a top retailer in Nigeria and operator of the largest supermarket chain brand in South-west Nigeria, outside Lagos.
The company currently operates 19 stores and 1,000 staff spread across Lagos, Ibadan and Abeokuta. In addition, it has been listed in the FT annual ranking of Africa’s Fastest Growing Companies for the consecutive years 2021 and 2022.