Modern grocery retailers are fast cannibalizing the sales of traditional retailers in Nigeria, according to the 2020 retail report by Euromonitor International.
The report by Euromonitor, a global market intelligence publisher stated that the on-going rise of urbanisation, partnered with the increase of busy consumers, especially time-poor women who have entered the workforce, saw a growing demand for convenient retailing options.
“Modern grocery retailers attract consumers through having larger shopping spaces, with air-conditioned facilities and a more extensive array of products, often at discounted or promotional prices,”
“Also the growing demand has been a boost for them as they often offer a wider range of products under one roof, allowing consumers to do weekly, or monthly shops, in one trip,” the report further stated.
Nigeria’s retail sector remains relatively under-developed as it continues to be dominated by traditional grocery retailers due to the growing population in both rural and urban areas. And most Nigerian businesses are structured as traditional grocery retailing due to the minimal costs involved in running the outlets in most parts of the country, particularly in low-income areas.
Examples of modern retailers in Nigeria are Shoprite, Spar, Hubmart, Googies super market, Park n’ Shop etc, while the traditional ones are the corner shops, kiosks, local markets and street vendors’
Cheng Fuller, a retail and marketing consultant said, “Overtime mass grocery retailers were typically a form of tourist destinations but increasingly they are offering convenience, good hygiene and cheaper prices. So I would say that they are the future.”
Even though the Nigerian landscape is still an emerging one, highly structured by traditional grocery retailers. The modern retail channel is growing fast but the high cost of establishing these outlets is expected to see traditional grocery retailers retain its lead.
According to Abiola Gbemisola, a consumer analyst at Lagos-based investment firm, Chapel Hill Denham it will take time for the modern retailers to own the value chain because the larger segment of the market is still concentrated by the mass market and not everyone in that market can afford to do modern tread of shopping.
Nigeria may be the Giant of Africa, but not when it comes to the global retailing landscape. According to a 2019 Global Retail Development Index, Nigeria ranked 30th position, the lowest position on the list. And this is three places lower than it was in 2017. Nigeria is the last African country and the last nation on the list.
Analysts say the key to making the retail sector more competitive and contributing more to Gross Domestic Product (GDP) lies in the government’s ability to formalise the sector.
Some of the bottlenecks that policymakers must address include improving the level of physical infrastructure, reducing the high unemployment rate, and boosting GDP per capita to support consumer spending growth.
The rising level of poverty since the crash in the crude oil price of mid 2014 that plunge the country into its first recession in 25 years has made it practically difficult for the country to exploit its huge population that lunge for consumption.
Over 50 percent of a population of 200 million live on less than $1.90 day as the country overtook India last year as the poverty capital of the world.
The National Bureau of Statistics (NBS) has said that Nigeria’s inflation rate for the month of January this year was 12.13 percent, the highest in 21 months as price of food stuff continues to spike on the back of border closure by the Federal Government.
“The downward movement in the ranking affirms that consumer purchasing power is still weak. Consumer demand is the fulcrum of retail performance, hence the under-performance,” Damilola Adewale, a Lagos-based economist.
