Nigeria’s retail industry is on promising path of growth – Izuchukwu
As Nigeria’s retail sector expands amid economic upheavals, VAL IZUCHUKWU, a business development and retail expert, who sits on the board of Brands and Trade Limited as chairman and strategy adviser, tells OSA VICTOR OBAYAGBONA in this interview, that despite some inherent challenges, the retail industry still offers huge opportunities for investors. Excerpts:
How would you describe the retail industry in Nigeria?
With a population of more than 200 million people, and the steady recovery from the pangs of the pandemic, the retail industry in Nigeria could be said to be on a promising path of growth and expansion. Wholesale and Retail are the third largest contributors to Nigeria’s GDP, contributing some 16 percent of the total.
Despite some inherent challenges and risks, the retail industry in Nigeria still offers huge opportunities for investors. In the last decade, it has attracted many global retail giants and has also propelled the growth of some indigenous retailers, grocers and supermarkets. In recent times, there’s been accelerated growth of e-commerce driven by the Covid-19 experience.
This has been supported by increased smartphone penetration, greater access to digital payment technology and faster internet speeds. More people are now embracing the idea of sitting at home and ordering a wider range of goods online, thereby opening a new vista for the retail industry.
Manufacturers are now even more pressured to make more strategic choices, across these multiple channels, with the right trade-partner relationships, in order to deliver value to their customers.
The experience of covid-19 shutdown was an eye opener about managing production and inventory. The distribution industry will be better prepared for a dry-up of inventory and slowdown on importation
What are the challenges confronting retail distribution in Nigeria?
A deep dive into the nature of the Nigerian market will reveal quite a few related challenges.
The retail business in Nigeria has a very large and fragmented outlet base. Modern trade is still in the early stages of development. The traditional channels which account for over 90% of the Points of Sale is characterized by low volume, diffused product base, and lack of supply chain visibility. These issues create a lot of complexity and cost to the retail distribution system in Nigeria.
There are additional challenges of information flow. The data generated from transactions across the supply chain are hardly accessible and hence, creating a big gap in distribution and inventory management. There is lack of advanced information technology to, among other things, help keep track of stock levels and purchase patterns. When such tools are even introduced into the market, as in the case of some applications built on the growing access to mobile technology in Nigeria, we still see apathy, ignorance, and low skill among the retailers, as key factors that slow down their adoption and usefulness, especially in providing the analytics and necessary on-time information to distribution partners.
Nigeria is characterized by infrastructure deficiency. This increases the cost of distribution and negatively impacts speed to market. Many mom-and-pop stores and groceries are situated in congested areas with poor topography and dysfunctional roads, thereby making accessibility a nightmare. In many of such places, there is a dearth of amenities like banks and communication facilities. To navigate through these challenges, some companies resort to exploring traditional and sometimes outdated distribution models, which adds more bottlenecks to the layers of distribution and often brings some distortions in the distribution chain.
There is also the problem of capacity. Many players in the distribution industry lack the requisite manpower, skills, and resources for what they signed up for. This leads to a lot of tension and frustration among the players, which leads many to resort to disreputable activities in order to survive.
I understand that Brands and Trade is barely 3 years in the distribution and logistics business; what is the Brands and Trade’s edge and how are they battling competition?
Well, three years of major impact may be short from an execution perspective, but the capacity, study and planning has been many years in the making. Here are some details as to why manufacturers and retailers are choosing Brands and Trade:
The foundation of the “Brands and Trade’ edge is her people and their drive for distinction. In Brands and Trade, we have a team of thinkers and doers, some of whom are also supply chain and distribution experts who share a singular commitment to get the job done of having satisfied customers. These talented individuals are across all business and non-business teams, including the directors, investors and those who are not actively engaged with the day-to-day operations.
Coming from this background, the Brands and Trade team is highly engaged and is on a mission to come up with better and simpler ways to get complex things done. The company enhances this by rewarding superior performance with promotions and pay-for-performance incentive programs. All the Business Managers have been groomed internally. It takes a company with international standards to have developed leaders from sales executives in just 3 years, and they are now heading the different units of the enterprise.
Brands and Trade essence is captured in a simple value: Excellence. This makes it easy for everyone to connect with and follow. The company culture is embedded in the mantra of “Get it Done; Do it Right”. We have built this into many symbols that showcases who and what we are. We will continue to invest in the development of the team in business and personal development.
We are in full alignment with the strategy of our partners and will always endeavor to exceed their expectation of being the benchmark distribution partner. We strive to understand their businesses and fully adopt their brands and products, treating them as ours. As much as possible we replicate the sales structure of our partners and play in their channels and try to get our reports to fit into their reporting structure. I must say that by doing so, we are also enjoying tremendous support from them which is invaluable.
Brands and Trade is investing in technology, building the right infrastructure, and deploying bespoke tools and applications for superior inventory management. We also employed a Field Force Management tool with geo-spatial capability to ensure optimal coverage, and stock-in-channel prediction.
Our operations are built around the customer. With support of analytics and automation, we create fulfillment options that service our customers to their nearest point of sale. We built an ecommerce platform to serve our customers who would prefer to shop online. We have developed pre-sales systems and created walk-in centers in locations that will be easy for our customers to pick-up goods on their daily routes at a discount.
Finally, we learn from our competitors, many of whom have been in the business long before us. We study them and constantly strive to be better than them. Our Direct-Store-Delivery is now being adopted by many of them who never tried or who abandoned this earlier. Our drive for right pricing and instant payments is helping to regulate the business and improve the profitability of distribution in our coverage area.
The traffic situation is a serious issue in many cities across the country. How do you cope with this in driving efficiency in your distribution and logistics operations?
The traffic situation is largely a reflection of the state of infrastructure in our operating environment, this is often accentuated by seasonality, like in the rainy season. We however understand this is also a sign of population growth and potentially, increase in consumption. Hence, we treat this as a business opportunity to leverage for impact.
Considering the opportunity to innovate presented by this traffic situation, we created our business model and operations taking cognizance of the challenges in the sector. We leverage our territory knowledge and expertise to put in place an efficient routes management, effective pre-sales process and order management. We created ‘stockists’ in some areas that are extremely difficult and also introduced walk-in centres where customers drop by on their route to work and pick up items at a discount. This removes a lot of pressure from our fields team.
We are strong in employee development and training. Our field team is trained routinely on driving, safety, and resource management. We drive efficiency and make the right investments. For instance, we try to focus on low fuel consumption, and fit-for-purpose vehicles taking cognizance of the terrain. We have adopted tricycles in areas where they can offer better value.
What is the future of the distribution market? What do you hope to do differently to take advantage?
The distribution market is changing for good even as the world is getting comfortable at ordering online and getting goods delivered to their homes. Here are my thoughts:
Omnichannel will be foremost in the minds of the manufacturers and distributors to provide for the right distribution solution for all the channels.
The experience of covid-19 shutdown was an eye opener about managing production and inventory. The distribution industry will be better prepared for a dry-up of inventory and slowdown on importation. Running out of inventory is missing an opportunity to sell. The distribution industry will evolve to anticipate and fill the gap in such circumstances. There will be quest for forecasting tools and analytics.
Another major change is the growth of digitization. Many transactions will become digitized. This will create visibility at every layer of the transaction process
We see the future as one laden with opportunity. Brands and Trade will continue to focus on innovation and finding ways to do things faster, better, and cheaper. We will constantly engage our clients on their changing needs to understand what solutions to proffer.
We will keep on learning new ways of delivering value and unlearning the things that are no longer suitable. Through this, we remain agile, nimble, and innovative to respond to the changing needs and landscape.
We will continue to evolve with the changing times, as we disrupt with technology and new business models.