Consumer experts attribute the growth of the retail business to the growing Nigerian population, which is generating increasing demand for retailers in the country. Other factors include the growing sophistication of Nigerian consumers, improving economic conditions leading to an increase in purchasing power and the activities of both the state and federal governments to encourage the entry of international retailers.
The exceptional growth in Nigerians’ disposable income has, in the past three years, seen sales in the country’s retail market rise 66 per cent from $106 billion in 2011 to $160 billion in 2014.
An independent feasibility study conducted on Abuja and Lagos by real estate investors shows that within the 9km trade area of income groups in Abuja, ranging from lowest to highest, 50 percent of the households were in the high income group category with 78,000 of them earning income of over $150,000 per annum.
In Lagos, within 8km radius of the Ikeja City Mall, there are roughly 1 million households spending about $1,500 per household per month across the various expenditure classes, giving about $18,000 per annum per household.
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Retail market watchers estimate that sales would further rise to $198 billion by 2016 and, according to Michael Chu’di Ejekam, director, Real Estate at Actis, the rising disposable income of the population would continue to attract international companies and world-class retailers such as Carrefour and Pick n Pay, leading to the opening of more retail outlets.
Gbenga Olaniyan of Estate Links Limited affirms that quite a lot was happening in the retail market with new malls such as Osapa Mall and Maryland Mall, which is rising from the ashes of former Maryland Shopping Complex. “We have about 55 percent commitment in Maryland Mall, even though we are yet to break ground; the rentals are going up in retail. Osapa is going for $900 per square metre with Shoprite as anchor tenant; Genesis is also there,” Olaniyan told BusinessDay in an interview. Ejekam notes that there is a major shift from the purchasing of essentials to more income elastic items, saying this gives impetus to the planned entry of many brands that resonate well with Nigerians.
BusinessDay Research and Intelligence Units (BRIU) in its report on the Nigerian Real Estate Market 2014, notes that in 2000, there were no malls in Nigeria, pointing out that, in the last decade, the number has gone up to 30. “Though not a big number, it still indicates rising demand for shopping outlets and spaces; however, it might be interesting to note that Lagos has only three ‘A’ Grade shopping malls for its population of over 18 million in comparison to Johannesburg, South Africa, with a population of 4 million, yet it has 72 malls,” BRIU says.
BusinessDay had, in an earlier report, noted that this market was not growing as it ought to, explaining that the growth was held down by challenges in real estate space the development of which was in turn hampered by issues in land acquisition and the right location.
According to Ejekam, the retail revolution remains at its early stages, pointing out however that the possibilities are thrilling which is why groups such as Actis would continue to play a major role in developing world-class retail centres to accommodate the expected expansion of retailers in the market place.
“A major hindrance would be the ability of brands to secure local franchisees or joint venture partners,” he told BusinessDay in a telephone interview, adding, “at the moment, there are only a few local players with the expertise and the financial wherewithal to fund working capital to rollout stores.
Anne Agbaje
