On a crisp afternoon of a New Year’s Day, Bailey had to squeeze herself through a throng of people to go into the Adenuran Ogunsanya Shopping Mall located at Surulere, a commercial town in Lagos Nigeria.
The 27-year-old reporter from BusinessDay, who hadn’t been to the place before was surprised that a Mall could be cramped amid an economic downturn and austere period.
Over 50 people waited outside Shoprite stores because the place was clocked to pave the way for shoppers inside to finish buying items before the ones outside could go in.
But Bailey came to the realization that she was mistaken, as a lot of people could be seen strolling and chatting without making purchases, while some, especially ladies were taking selfies.
Luxury and accessory shops were scanty as sellers despondently stared into space, and the large chunk of customers that went into Shoprite came out with small yellow bags full of basic food items.
But one thing the certain: Nigerians like to go shopping even though their pockets are squeezed.
“According to Nielsen Shopper Trends syndicated study, Nigerians shop 30 times per month and they want value and assortment when they shop.
They are also price-conscious, with more than 70 percent aware of prices and 95 percent noticing price changes,” said analysts at Nielsen.
Nigeria hasn’t recovered from a sudden drop in crude oil price of mid-2014 that stoked a severe dollar scarcity that paralyzed business activities and dealt a great blow on government revenue.
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While the introduction of a new foreign exchange policy in 2017 and a rebound in crude oil price helped the country exit its first recession in 25 years, unemployment rate is at an all-time high of 23 percent as the country displaced India to become the poverty capital of the world.
Income per capita has declined to $2236 percent in 2019 from $2719 in 2015, according to a recent report by Financial Derivative Company.
Inflationary pressures and hike in fuel price have put consumer spending in check, and it could get worse this year as government has increased Value-added Tax (VAT) to 7.50 percent from 5 percent.
Also, the Nigerian Electricity Regulatory Commission has approved increase in electricity tariff by the 11 Electricity Distribution Companies (DisCos); the increment will take effect in April.
“For Nigeria, consumers will groan about the hike in VAT, the restoration of tollgates and cost-reflective electricity tariffs,” said Bismarck Rewane Chief Executive Officer of Financial Derivatives Company Limited.
While the economy is expanded by 2.38 percent in the third quarter of 2019, it is lower than the population growth rate of 2.60 percent.
A stuttering economy coupled with huge service charge cost has forced many tenants to desert stores as patronage continues to be low.
Last year, there were a total of 19 stores empty, even the cinema hall had been sealed. Some of the top brands that had evacuated include: Ruff and Tumble, the seller of kid clothes, Samsung Phones, and Cash and Carry.
Aside shrinking consumer wallets that causes low patronage from customers, analysts attributes the menacing gridlock in the town to menacing gridlock as a lot of high-end earners have relocated to other parts of the state.
“Even if economic activities pick, the gridlock will continue to discourage people from coming here to shop,” said Adebukunola Taiwo, an Architect and Head of the Apapa Management Office.
Novare Lekki Mall, a 22,000 square metre retail facility has a 57 percent vacancy rate as at June 2017, slightly reduced from the 63 percent figure recorded in December 2016.
This is followed closely by Jabbi Lake Mall in Abuja, whose vacancy rate by the first half of this year was estimated at 56 percent. The mall, a 30,000 square metres shopping outlet, sitting on about 48,000 square metres of land, is a joint venture project between Actis Nigeria (a private equity firm) and Duval Properties.
Analysts attribute the rising vacancy rate in this mall and others in the Federal Capital Territory (FCT) including; Ceddi Plaza with 27 percent vacancy rate, Grand Towers, 22 percent; and Silverbird Entertainment Centre, 32 percent, to the lower purchasing power in the economy and the high political risk of the FCT.
The country’s rising young population that crave for consumption is a boon for the economy, but lack of transformation policy on the part of government is continually undermining economic growth.
