How COVID-19 shaped Nigeria’s 2nd biggest sector in 1yr

It has been one year since Nigeria recorded its first case of the Covid-19 virus and the mitigation measures aimed at slowing the virus have made the wholesale and retail sector to be challenged with macroeconomic volatility, rapid naira depreciation, weak purchasing power and household incomes.

Here are some of the events that have happened in the sector since Nigeria reported its first Covid-19 case on February 27, 2020.

Avoidance of malls by shoppers due to crowds and long queues

When the pandemic started, the government announced some restrictions to curb spread of the virus. For example, malls are expected to maintain a 60 percent occupancy rate, in line with the physical distancing rules, with hand sanitizers, washbasins, and temperature checks as compulsory requirements at entry points.

This led to a drop in footfalls (the number of people entering a shop or shopping area in a given time) in malls e.g. Shoprite, as shoppers preferred smaller stores located in the neighbourhood to get groceries than in the malls.

Landlords begun offering rental concessions to retailers

The lockdown in April battered retailers, and consequently constrained them from meeting rent obligations. This made landlords offer concessions or rental reductions so as not to lose their retailers from the mall while avoiding running into debt.

According to a report by Broll, African-focused commercial property firm, rent concessions were granted to retailers in some malls, while some property owners acceded to certain percentage reduction in rental payment.

“Additionally, some landlords have been aggressive with reduction granted, while others are yet to offer concessions against the backdrop of debt servicing requirements on facilities obtained from banks.”

A rent concession can be defined as a price reduction or some other form of benefit offered by landlords for inducing a prospective tenant to move into their property.

Loss of jobs in retail stores

The adverse impact of COVID-19 pandemic on household incomes led to low patronage, which made retail stores suffer job losses and wage cuts.

Tunde Akinwunmi, an official at Spar, noted that the atmosphere at the store was not encouraging as the firm is barely making enough profit, saying that it ‘survives by the grace of God’.

“The poor patronage and sales caused by COVID-19 reduced staff numbers from 70-75 to 50. And despite the fact that our prices are cheaper than other stores, customers are still complaining that they are expensive,” Akinwunmi said.

High exchange rate hinders stocking for festive period

Apart from weak demand, retailers could not afford to stock up their stores in preparation for the festive period as the foreign exchange made it expensive for them to clear their goods, thereby still dealing with old stock.

“Usually it takes 40 days to get my new stock of female shoes. But since August, my goods have been trapped at the port because it is too expensive for me to clear them. And also, these shoes that have been with me since last year are not bought by anybody,” Chinedu Igwe, a shoe retailer, said.