Nigerian retail firms are walking a tightrope as a surge in raw material prices, freight costs, and foreign exchange depreciation have squeezed profit margins for a sector looking to recover from the Russia-Ukraine war.
Six out of ten Nigerians over the last year have switched brands due to the increased prices of commodities, data from NielsenIQ, a leading retail and consumer insight company said.
According to NielsenIQ, Nigerian consumers are prioritising future planning, physical wellness, saving for unforeseen circumstances and mental healthiness above every other need in the next 12 months.
“Consumers will be shifting their wallets to spend more on education, health and wellness, childcare, transport, utilities, savings and investments,” NielsenIQ data said.
Joyce Nwachukwu, associate director, of retail intelligence at NielsenIQ Nigeria said rising inflation has been a recurring theme in recent times as consumers are feeling the impact of the increased cost of doing business in Nigeria.
“Consumers are paying more for less with a highly inflationary market,” Nwachukwu said.
NielsenIQ’s data said at least 78 percent of Nigerian consumers think that the country is in a recession apportioning the burden to the high cost of living at 79 percent and 59 percent attributing to the slowdown of the economy.
Experts at NielsenIQ breakfast meeting, themed Navigating the New World of Uncertainty say sector players will have to embark on innovative measures in order to survive the headwinds.
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“Businesses need to start doing things differently to address the needs of shrinking consumers’ wallets,” Nwachukwu said at the event held at Nigeria’s commercial capital.
For Chidi Okoro, founder of Drugs and Medicaments Nigeria Limited, the way forward is for companies to adopt strategies that will create a culture of constant innovations.
“Retailers need to pay attention to the profile of their customers; They need to provide products or services that are data-driven for their customers,” Okoro said.
He added, “Retailers are facing intense competition from traditional supermarkets; Companies must adopt different strategies if they must survive or remain relevant for their customers.”
Faith Wanderi, managing director at West Africa at NielsenIQ said there are lots of opportunities for retailers despite challenges around the country’s macroeconomic indicators.
“Nigeria’s large and young population presents an opportunity for growth; however, innovation is essential for firms to stay ahead of the curve,” Wanderi said.
Olawale Akanbi, group head of growth marketing merchants and ecosystems at Interswitch said in today’s competitive retail environment, it’s more important than ever to put the customer first.
“This means understanding what customers want and need and then delivering on those expectations. Retailers who can do this will be more likely to win and retain customers,” Akanbi said.
He noted that Retailers who collect and analyse data about their customers can use this information to make better decisions about everything from product assortment to pricing.
“This can help them to improve the customer experience and boost sales,” Akanbi said.
Concerning the outlook for 2023, NielsenIQ said “As a forecast into 2023, investors have been advised to go into good innovation supported by good activation to win in these uncertain times”.
NielsenIQ explained new pathways to growth for retailers and consumer goods manufacturers at the breakfast event.
With operations in more than 85 countries, NielsenIQ delivers the most complete and clear understanding of consumer buying behaviour through an advanced business intelligence platform with integrated predictive analytics.
NielsenIQ was founded in 1923 and is an Advent International portfolio company. In Nigeria, NielsenIQ has been in operation for +25 years and is the HQ in the Western Africa region.
