Recent developments in Nigeria’s retail landscape indicate that the stirrings of a retail revolution are underway. Analysts see Nigeria’s retail sector as an untapped market for retail brands (including luxury brands). The demand for retail and luxury retail brands is gradually on the rise.
Nigeria’s burgeoning middle class, with an ever-increasing amount of disposable income and Lagos, the nation’s most populous city, expected to have more than $25 billion a year in household spending available to it in 2020, point to Nigeria’s retail sector as being on the brink of change.
There is also a sense of renewal which makes this forecast very attractive, particularly for luxury brand and retail investment. A consistent Gross Domestic Product (GDP) growth in excess of six percent per annum and a population size of over 160million people signifies the nation’s potential on the continent.
The year 2005 saw the opening of Nigeria’s first modern style shopping mall, The Palms in Lagos.
Prior to this, Nigerians had limited retail options with its retail industry comprised of small family-run outlets and limited luxury brands that could only be sourced in an informal manner through individual suppliers.
The Palms paved the way for additional successful shopping mall developments for a nation whose population equates to half of that of the United States.
Luxury brands Ermenegildo Zegna and Porcshe recently put down roots in Nigeria. Persianas, which acts as a brand ambassador, assisted the successful set up of brands such as Hugo Boss and Puma in its retail spaces. Persianas on the other hand, is taking the pioneering step to develop Nigeria’s first department-concept store that will house multiple brands “under one roof”.
Although online purchasing of luxury brands is possible it is not utilised as a means of shopping for luxury as it might elsewhere in the world. Those who seek out luxury brands still have to resort to travelling abroad for their purchases. There is therefore space for extensive retail development in the region.
With all eyes on the African continent, home to an estimated 1 billion people and investors coming in their numbers in search of yields, Africa’s own giants are starting to emerge. Until now, the continent is hardly synonymous with wealth and luxury, but the African Development Bank (AfDB) believes this is about to change.
A third of the continent’s countries are recording Gross Domestic Product (GDP) growth rates above 6 percent. As a result, many of the world’s biggest watch brands are investing in stores and distribution networks on the continent.
For marketing purposes, most watchmakers split Africa into three regions: the Maghreb, Central, and South Africa. Brands are most strongly established in the latter.
According to Jean-Claude Biver, head, watch division at LVMH, which sells products in South Africa, Nigeria, Botswana and Angola, the firm opened a distribution network in Africa some five years ago, with its products meeting the taste of the affluent.
Also, Peter Harrison, chief executive, Richard Mille Europe, Middle East and Africa believe that Nigeria is the force today given its enormous population size and lot of available raw materials. As proof of this affluence, Harrison cites the example of a limited edition watch costing about £55,000 and made in a series of 10 that was marketed in Angola’s capital, Luanda, and sold out in days.
No doubt, the continent’s growing home market is only part of the story as tourists from the continent also boost sales.
However, Jean-Daniel Pasche, of the Federation of the Swiss Watch Industry, points out that exports of Swiss watches to Africa are less one percent of output.
Swiss company Ulysse Nardin says a presence in the region is helpful in building awareness, even if big purchases are made elsewhere with its presence in Abuja, Nigeria’s capital.
In common with many, Hoffmann sees South Africa as an established market where he has a number of concessions in larger outlets. But companies find the lack of established commercial infrastructure elsewhere on the continent challenging.
The Knight Frank Wealth Report 2014 which identifies areas of growth for luxury brands over the next ten years, reveal that the African continent leads the way in luxury brand with Ghana, South Africa, Nigeria, Kenya and Zimbabwe all appearing in the top 10.
Africa’s growth potential is further highlighted in the new Luxury Opportunity Index report, which tracks growth in four areas-Luxury retail footprint, Wealth Creation, Premium air travel and Economic growth. The index show that of the top 10 locations identified in the index, five are in Africa.
Anne Agbaje
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