In a race that has the two biggest players in Nigeria’s pizza market jostling for leadership by market share, Domino’s and Debonairs not only ruffle feathers, considerations about affordability and opting for superior taste are also at war.
When Domino’s Pizza vessel anchored on Nigeria’s shores in 2012, its entry was that of a whirlwind announcing the coming of a heavy downpour. The American brand chased an aggressive visibility campaign that stood right in everyone’s face and helped the word ‘pizza’ to gain posh popularity in the local speech repertoire.
Interestingly, pizza was not entirely foreign anymore at that time. South African brand, Debonairs Pizza was already playing in the market at a more sophisticated level, priding itself as a premium quality producer that exquisitely served high-end consumers with pizza prices ranging from N5,000 upwards.
But by embracing the lower pricing advantage, Domino’s unlocked the key to the heart of retail consumers, with consistent unveiling of new promotions on how to purchase one and gain an additional free other.
First, the deals were split into medium and premium categories at N2,000 and N4,800, respectively. Lately, the consumer attraction initiative has shifted from whole box of pizza package to promotional deals of smaller sizes. The cheapest pack, for instance, goes for as low as N550 in a promotion tagged ‘Smallie Combo’. The move is seen capable of establishing long-term relationship with low-income customers to whom affordability really matters.
Amalia Sebakunzi, marketing director, Domino’s Pizza, told BusinessDay that the initiative was targeted at achieving a more inclusive pizza market for all while broadening its market coverage.
“We started with the idea in February 2018. We wanted to cater to the needs of the Nigerian population. Affordability and access to the pizza was our goal for the idea,” Sebakunzi said.
In a counter move to also deepen its customer base which appears poised to flow in the opposite direction should new strategies fail to be taken, Debonairs appears to have stepped down to reel out offers going for as low as N1,200. In fact, it has also followed the path of buy-one-get-one-free to retain its walk-in customers.
“Born out of our keen desire to serve you a superior pizza experience, you can now buy a box of Real Deal Pizza from N1,200,” the South African brand said in a Twitter post.
Not taking the battle lightly, it also searching for franchise partners to spread its products across the country, promising a proven system with a track record of success, realistic and sustainable income, opportunity to be part of a leading quick service restaurants (QSR) company, and more.
Analysts count the duo’s expansion activities as a strategy resulting in the creation of a new market with an appeal for affordability but see Domino’s to be taking the larger share than Debonairs.
Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers, believes Domino’s commands more market ground based on cheap rates, noting that it might tarry before consumers begin to adjust to Debonairs’ service to the low-income category since it has been known for premium and more expensive quality.
“In the pizza market for Nigeria, Domino’s has more market ground compared to Debonairs because they are cheaper. Debonairs Pizza is known for quality, but the larger portion of the market are people that prefer affordability to quality and that is why you see more Domino’s Pizza outlets in Nigeria,” Akinloye said.
“Debonairs serves the premium market because they are for the premium buyers who can afford quality. The N550 pizza does not appeal to the premium market. With this Domino’s is trying to bring in new people in the market. It is more about being able to make it affordable for a new market category. With this you will begin to see more people that will come into the market,” he said.
Going retail with the products is the next niche for players to come down to the level of the economy as the country struggles with high poverty rate and rising population, said Yinka Ademuwagun, a consumer analyst at United Capital.
Nigeria’s real GDP grew at an annual growth rate of 1.93 percent in 2018, compared to 0.82 percent recorded in 2017, according to the National Bureau of Statistics. However, it lags behind a population growth rate the World Bank report says averaged 2.6 percent since 2015.
BusinessDay analysis of IMF per capita income data on Nigeria indicates a rise from $2,365 in 2010 to $2,582 in 2011 and a further rise to $3,268 in 2014. Thereafter, it trimmed to $2,763 in 2015. By 2017, Nigeria’s income per capita fell by 10.7 percent to $1,994, from $2,207 recorded in 2016.
Ademuwagun said while the growing population can create higher volume of sales, affordability is also key to the focus on lower retail segments.
“Most of the consumer goods and even financial services are going retail. And that is the way to go. It is either you do premium service or retail,” Ademuwagun said.
“Even in the beer segment and everywhere there is always that segment of retail, mainstream and premium. The margin will be there in the premium segment but the one that will boost your volume and balance sheet size is retail because you will have access to larger number of people who will buy your product which will also create awareness for the premium segment too,” he said.
Bunmi Bailey & Temitayo Ayetoto
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
