On a Saturday morning, Ibukun Funsho, an undergraduate student, went to her usual vendor who sells body lotions and other beauty products. She searched for a foreign brand of skin whitening cream. It had been close to two years since she last purchased one.
When she could not find it, she asked her vendor, who told her that he stopped selling the product due to falling demand.
This largely shows what is happening in Nigeria’s retail space. Demand for foreign products is slowing as consumers now perceive them as more expensive to purchase, discouraging local merchants from stocking them.
International brand interest in the Nigerian retail space has slowed down as strong enquiries in the formal retail market have not translated into actual transactions, according to the 2019 half-year Nigerian retail report by Broll Nigeria, one of Africa’s leading commercial property services companies.
“The general consensus amongst a number of these brands is that they require experienced local franchisees to introduce their brands into the market. The delay in the establishment of these global brands in the market suggests that the existing pool of experienced franchise operators are not looking to take on new brands within their portfolios at the moment,” the report said.
The report analysed Lagos and Abuja markets, where most of the country’s retail activity is concentrated.
The dimming interest in foreign brands is due to weak purchasing power and poor ease of doing business in Nigeria, consumer analysts say.
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“The big underlining factor here is the presence of so many brands in the market competing for market share,” said Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers.
“Most franchisees prefer to sell what consumers already know and are familiar with. Besides, some of these global brands are more expensive and belong to the premium end of the market,” Akinloye said.
Data from the National Bureau of Statistics on Gross Domestic Product (GDP) by Income and Expenditure approach at 2010 purchaser’s values show that consumption expenditure of households has been declining at varying paces since it rose by 1.5 percent in 2015. Also, per capita income in Nigeria declined to $2,049 in 2018, from $3,268 in 2014, according to the International Monetary Fund (IMF).
Last year, Nigeria overtook India as the country with the largest number of people living in extreme poverty, thereby becoming the world poverty capital, according to the Brookings Institution. This year, the number has risen to 91.6 million from 87 million in June 2018. Every minute, six Nigerians enter the group of extremely poor people, according to the World Poverty Clock.
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“The two things responsible for low investment and involvement of global brands in Nigeria are the ease of doing business in Nigeria which is terrible and global investors thinking that despite the large population and potentially large market in Nigeria, the value of dollars in the market is unattractive. People are poor,” Abiola Gbemisola, research analyst at Lagos-based Chapel Hill Denham, said.
In 2018, Nigeria ranked 146 out of 190 countries in the World Bank Ease of Doing Business ranking, dropping by a spot from its 145th position in 2017.
A 2010 research paper by Alex Ekeng and Sunday Ewah described Nigerians as indiscriminate consumers who lack pride in themselves, their competence, abilities and in anything that they produce.
In the paper titled “Analysis of Consumers’ Propensity towards Foreign Products,” Ekeng and Ewah said an average consumer in Nigeria would reel off the number of foreign products in his or her collection while disparaging a similar product from a local source.
But all this may be changing as a shrinking consumer wallet and the attendant declining demand takes a toll.
