The weakened purchasing power of Nigerians has necessitated them to attach more importance to basic needs over luxury items such as electronics, and this translated to lower sales revenue for electronics.
With consumers’ wallet yet to receive a tangible boost, a large number of households are allocating more of their income to basic items such as food, clothing, shelter & transportation, they can’t do without, while placing less focus on electronic products like air conditioners, dishwashers, refrigerators, washing machines and dryers, microwave ovens, etc.
Johnson Chukwu, Cowry Asset Management Limited said that the lack of improvement in consumer’s income has made them focus on food and food-related items or basic items while shifting interest away from secondary or disposable items like electronics.
“Aggregate demand and consumption have weakened because overtime consumers’ income has been eroded by inflation and devaluation of the exchange rate which has made it difficult for them to afford the volume of goods and services that use to afford before,” Chukwu said.
The country’s per capita income has been on a decline since 2014. According to the International Monetary Fund (IMF), per capita income data in Nigeria declined to $1,994 in 2017 from $3,268 in 2014.
Also, from the National Bureau of Statistics (NBS), the electrical and electronic sector contracted some 3 percent points from 6.47 percent in 2014 to 3.75 percent in 2018 on low customers’ patronage among others.
“The sustained weakness in consumer purchasing power has limited the demand for electronics. To put this in perspective, average inflation rate between January and June 2018 was 13.2 percent while NBS reported that disposable income within that period grew by about 10 percent which ultimately implies prices grew faster than income,” Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers said.
BusinessDay visit to popular electronic stores like LG Electronics, Samsung, Panasonic and Sony showed revealed that there was very few patronages as some people were basically window shopping and not to buy anything.
Through a discussion with the sales representatives of these stores, findings showed that even though they had adjusted their prices lower after the dollar scarcity in 2016 which made them double their price due to the fact that most of their products are imported, consumers are still not able to afford them
Tola Adesanlu, a sales representative said that although the prices are a bit lower than what it was before, people still cannot afford it and that what they do is just make deposits and pay later.
The electronic retailers are saying that things will be better for them unless the dollar goes back to what it was in 2015, but analysts are saying that it is not possible as the dollar cannot be controlled internally but suggest other methods to get the sector or market back on track.
Akinloye suggested that the implementation of the signed minimum wage bill would increase the income levels of the country making people to be able to afford electronics.