Retailers in Africa’s biggest economy have been hard hit by the surge in prices of items ranging from food, equipment and stationeries as consumers’ income continues to shrink.
Chidi Akubuiro, the managing director at TradeDepot, a B2B eCommerce and embedded finance platform, in an interview says while the impact on consumers has been well documented, it is also important that we don’t lose sight of how it is affecting neighbourhood retailers who make a living from selling food items and other products across the country.
“For some products, we have seen more than 60 percent increases in prices in the last 12 months. On average, the price of products in our food category (dominated by noodles and pasta products) has increased by 27 percent,” Akubuiro said.
He also added that home care products have increased year-on-year by 43 percent, breakfast and snack prices have increased by 30 percent.
“These significant increases add to the pressure on store owners to not only stock products that will sell but to make sure they are getting the best possible prices for these products.
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“These rising prices and the wider economic situation mean consumers’ spending power is reducing, and that means less money in the hands of retailers.
“Even if store owners are certain that consumers will buy, rising prices mean they are likely to reduce their basket sizes, which in turn reduces their profits,” Akubuiro said.
Food inflation, which comprises more than 50 percent of the inflation rate, rose to 19.50 percent, the highest in eight months when compared to 18.37 percent in the previous month, according to the National Bureau of Statistics (NBS).
The hike in food prices as a result of the Ukraine-Russia crisis has intensified the hardship for many people, since both countries are major producers and exporters of agricultural commodities, particularly grains, and countries like Nigeria depend heavily on them for inputs in direct human consumption and industrial processing.
Last month, a report by Fitch Solutions stated that Nigeria’s rising inflation rate could be a key risk to consumer spending in 2022 thereby affecting purchasing power and limiting spending to essentials.
The report titled ‘Elevated Inflation Will Weigh on Consumer Spending’ predicts real household spending to grow by 3.6 percent in 2022, a slight deceleration from the estimated 3.7 percent growth in 2021.
“The Ukraine-Russia conflict has significantly impacted the global supply prices of key commodities, such as oil and gas, fertiliser, wheat, corn and barley. The commodity price increases are already feeding through into higher consumer prices and will continue to over the year,” the report noted.
Akubuiro advised that beyond addressing the factors that are driving up prices, it is essential that we prioritise the needs of store owners and support them to thrive in these challenging times.
“We need to make it easier for them to not only access the stock at the best prices to ensure profitability for their businesses but also to access financial services that will cushion them from the impact of rising prices and other pressures impacting their businesses.
