Citydia bringing world class retail experience to every neighbourhood in Nigeria

The modern retail market in Nigeria is gaining momentum as stores like Citydia dot the cityscapes with attractive stores that are transforming the shopping experiences of most Nigerian shoppers. Valentine Aganbi, CEO of First Master Retailers Ltd (FMR), owners of the Citydia master franchise in Nigeria, spoke with FRANK ELEANYA concerning the new investments and milestones the company is making.

What is FMR into?

The whole idea behind First Master Retailers, FMR is to master retailing in Nigeria for Nigerians. The aim is to be the best example of what retail can be in Nigeria. Right now we are the master franchise owners of the Dia Supermarket. Dia Group is a multinational supermarket chain that has 8,000 stores around the world. First Master Retailers owns the right of Citydia stores in Nigeria. We are using the master experience of the global Dia Group to be able to execute world class supermarket by Nigerians for Nigerians.

What is your value-proposition to the retail market in Nigeria?

It is price and proximity. The whole idea is that you get into the neighbourhood where people are and you give them a reliable price that will make them very happy and put a smile on their face. Modern retail penetration in Nigeria is barely five percent. The penetration has been slow because since modern trade or supermarket came back into the market after the days of Leventis and so on, there are these great shops that have come out but they have come out in the more affluent areas, they are big and quite imposing and when you look at the average Nigerian who has to go out of his neighbourhood into these more affluent neighbourhoods, they rarely feel comfortable doing their main shopping there. They will buy things like Coke and Meatpie, bread doing the main home shopping is usually not the case. To break that psychological barrier, what you do is to put the stores in a smaller format and inside of their neighbourhoods where they feel at ease and the fellow shoppers are the people they live with, go to church and school with. The people that serve them are the people they know.

The other aspect of pricing is basically having price that is reliably affordable without compromise to quality.

How will Citydia achieve hundreds of stores in a short while?

We are opening several stores. We already have the sixth store open and we are going to be opening as much as two stores every month going forward. Most of those stores in this 2016 will be in the Lagos area and surroundings. Next year we will be going outside of Lagos into the Southwest and the rest of the country.

You can imagine what it cost to deploy a store. It is not just the hardware, the shelves, the freezer equipment – we are investing in warehouse and logistics and trucks. We are investing most importantly in people – we are hiring quite a few people and we are training our people both in Nigeria and abroad. All of that is quite material and all of that investment is being done right here in Nigeria. You can see it and you can feel it that whatever we are using in our stores, we are not using substandard equipment or substandard personnel. You can notice if you get close to the operations that we are giving Nigerians the opportunity to raise their standards and become steady vendors both in our supply chain, in our construction and in our preparation. So we have Nigerian companies that are doing renovation work for us, the ones doing shelving and woodwork for us; we have companies doing our manpower as well as our vendors in fruits and vegetables – we are establishing a standard and we give them a chance to meet those standards. I think that is probably one of the most lasting things that we will do for this industry and indirectly for the whole country. That we will bring standards that are recognized worldwide and that being a company that is growing fast, being run by professionals, force or encourage anyone interacting with us to raise their standards to a global standard.

We have seen retail stores open and operate for a while and overtime they are no more. How long are you in this market, is it for the long term?

We are in for the long term. You can see that the way that we are setting up the business is not a flyby night. One of the realities about Nigeria is that you can make money doing anything and you can make money very quickly and you can make money by exploiting shortages like you have in the current fuel shortage. However, you can confirm from any of our shoppers, through it all, our prices have been stable with only some measured increases because we are not about making profits in year-one or even year-two. We are about sustainable growth in sales and profit where we can build the stores to something that is quite big. We believe that if you do the right thing for the shopper, the consumer, people that work for you, vendors and contractors, it becomes symbiotic. Everyone works hard to make sure that you succeed. We are not going to stop in Lekki, Festac, Gbagada, Ikorodu, and Surulere. We are going right to where the people are….every neighbourhood.

So if you ask me, “Are we going to do 100 stores in Nigeria?” I will ask you “Are there only a 100 neighbourhoods in Nigeria?” my target is to have a Citydia store in every single neighbourhood. Until we get there we are not done because every single neighbourhood deserves to have a modern store where they can trust the goods, trust the people and they can leave there feeling good and not feel like they have had to sacrifice to be able to get a piece of heaven. It is the standard that every single Nigerian is entitled to. And they should not have to pay through their teeth. Go into our Lekki store, although it is a reasonably affluent environment, look at the people that come in and out of the store – different demographic, different income class but everyone feels comfortable. Everyone is welcomed and everyone has something they can put in their shopping basket.

The informal retail market controls between 90 to 95 percent of the retail market in Nigeria, how do you see modern retail stores like Citydia coming? Will it be in form of partnership or competition?

I don’t like the idea of a take-over because when I hear of a take-over I think of a coup d’état. I think the first thing to recognize is that no single country on earth has achieved modern trade without going through the transformation that we are going through – going from a zero to hundred. It is a transformation that happens with growing affluence, it happens with family needs, work and lifestyle. It is going to happen anyway. Sometimes it happens a little faster other times it is slower. When we give you the statistics for Nigeria, it is not a harmonized statistics because the five percent across the country actually means a higher percentage in Lagos and even within Lagos there are disparities.

Over time shoppers will increase their spending which results from increase in confidence. When we talk about transformation of the market, it is really not about “Do you get Nigerian shoppers to shop in a supermarket?” it is that “Do you get Nigerian shoppers to do their main shopping in a supermarket?” What you will see is a gradual increase. You will also see partnership and transformation. You will also see concessions. For example in our stores you have people who are doing fruits and vegetables, you have farmers who will usually send things to the open market now sending to the modern ones. You have developments encroach on some of the open unregulated markets. The fact that you have a NAFDAC today which did not exist two decades ago shows you the direction.

It is more difficult to regulate in the open market. It is more difficult to measure expiration dates, it is more difficult to find someone responsible. If there is something wrong in my store, you know my headquarters. I can show you the records of when the products arrived, what the movement was, who touched them and when we sold them. That regulation is required to keep our people healthy and productive. But we need more investors to make that transformation less gradual and probably a bit faster because the benefits are solid and we need to accelerate more people getting those benefits. We cannot limit the benefits to the affluent, everyone wherever they are and in whatever neighbourhood, gaining access to these benefits. They will still go to the open markets. Kenya has been on this journey and they are probably about 50 percent now. Russia when I was there some years back, they were somewhere around 68 percent but in the capital, Moscow it will be about 80 percent and smaller towns will be closer to 20 percent. In Turkey you might see as much as 98 percent. All of this did not happen overnight. It happened gradually. All we are here to do is expand the market.

How do you handle competition with more stores coming to establish in Nigeria?

It’s Fantastic! There is no amount of money that my investors or bankers can give me to help stimulate the market by myself. Right now it is all about the transformation of the market and the more players we get into the market, the faster we can transform it. We can make the cake bigger, we can reach more people. Down the road – ten to fifteen years, you will see a lot of competition but we will get there. Right now we just need good solid players coming to transform the market, so we can convince Nigerians that this is an excellent shopping format.

The deployment of technology is one of the characteristics of modern retail experience, what innovations will shoppers benefit from Citydia and are you utilizing online shopping in reaching customers?

One of the great benefits we get from our international partners is methodology and technology. We are really bringing world class technology to Nigeria and this is evident in the way we track our products, we inventory our products and eventually with the way we sell the products taking advantage of global licences from Dia group that we are in the process of implementing locally. All of these transcend into efficiency into tracking goods which leads into safety and quality, reduction in loss which will translate into better prices. We are also deploying technology in the way we handle the warehouse which is where all of our goods are delivered before upward distribution to various citydia stores across several neighbourhoods. This way we don’t have hundreds of trucks coming into our neighbourhoods, disturbing our neighbours. We want to be friendly neighbours. We are assimilating technology payment systems, with great companies in Nigeria like Interswitch, banking partners like Heritage Bank, to name a few. The banking partners help us improve the payment facilities with our shoppers. We try to include ATMs in most of our locations. We still have some downtimes; hence we want to have backup technologies where you can have payment offline as well as payment online, including payments from your cell phone. At any point you should get the benefits of our technology helping shoppers enjoy the shopping experience.

Online we have a partnership with Supermart.ng, an online retailer where you have a link to Citydia online. When you go online and click on the link you have our entire inventory available to you. This is because in our social media which is very active we have a lot of people asking us “when are you coming to our neighbourhood?” we will get there because as I said, our goal is to get to every neighbourhood but until then we think that the partnership with supermart.ng and a few other online retailers that we are beginning to talk to is good because even if we are not in your neighbourhood today, we are very internet savvy and anyone can go online, click on our online shop within a few hours, get these grocery items delivered at home or to any location.

Tell us about some of Citydia brands?

Our store brands are comparable both in quality and content as the national brands and the leaders in every category. The leading FMCG companies are all our strategic partners and you will find all of their products in our stores. We also partner with national distributors of international products. These are products that are not made in Nigeria but have representation in Nigeria. We buy from these distributors because we know our customers love these brands.

We have the Dia brands which are in our foods and homecare categories, there is the Bonte brand which is in our personal care category, we have Baby Smile brand for our baby care category and there is AS brand which is actually pet care and pet foods. In each of these categories you will find us with very competitive products. Most of the people who have experienced our brands are very eager to come back. It makes people come back to the stores. They love it. These are world-class products. Even in our liquor and beverage section we have our own wine and special spirits. We also have the widest variety of ice-cream products and assortments in Nigeria at the moment. With our brands, exclusive to Citydia stores, you will find most of these products at a considerable discount to what you find elsewhere in the market versus the leading product in each category because as I said, the idea is not to make our profits in a short period of time, the idea is to have sustainable growth of our brands and our shoppers so that we can have a partnership that will lead to sustainable sales and profit.

Our Citydia bakery has been a phenomenal success and we have not even scratched the surface of the opportunity. In most of the stores we have freshly baked bread, meat-pies, sausage rolls etc. We have people come in from long distances to buy two to three loaves of bread a day and they always come back. We have a formula that is consistent. Our products are reliable and of good quality.

What is the projection for 2016 for Citydia with regards to expansion?

We entered this year with four stores, but we are going to do in this year more than three times that. That’s growing quite fast. Some of the stores will be bigger and some of them will be smaller and that is going in the direction that we want because we expect that eventually, weshould be doing well over twenty stores per year and we are very much on track.