Broll: ‘Nigeria retail market is not for sissies’

The Nigerian retail market is not for sissies.

This was expressed by Norman Sander of Broll Nigeria. The comment by Sander, who manages Ikeja City Mall in Nigeria, comes shortly after South African retailing giant Woolworths gave up its Nigerian venture.

Woolworths announced last month that it will close its three stores in Nigeria as a result of difficult conditions of doing business including high rental costs, duties and inefficient supply chain.

Woolworths Group CEO Ian Moir said “When an investment no longer generates viable returns, difficult decisions have to be made to contain costs. The Woolworths clothing and general-merchandise business in Nigeria has not been successful, despite several attempts to improve performance.”

In a statement released yesterday Sander said “Yes, doing business in Nigeria is a challenge. But if you can offer middle class Nigerians the right price, product, service, quality and choice, the sky is the limit.”

As an employee of Broll Nigeria, Sander’s view also represents expansion by a South African firm into the massive Nigerian market. Broll Nigeria is a division of South African property services giant Broll Property Group. His view comes to dilute suggestions that more South African firms whch have ventured into the Nigerian market may follow Woolworths.

Sander said South African retailers should be prepared to change their models for the Nigerian consumer. If they do so, they stand to gain a firm foothold in a marketplace in a country where consumers are brand loyal and value good service, which is in short supply.

He added that the Nigerian market is vastly different from that of South Africa and its neighbouring countries. “Research is essential to understanding this unique set of consumer needs and norms, before venturing into this exceptional territory.”

Sander said “Mall rentals are high because of infrastructure and development costs which, in turn, demands high turnovers. Infrastructure is poor, red-tape is plenty and officials often interfere.”

The supply chain also takes far greater focus, with a host of potential obstacles to be navigated.”

He said retailers will need excellent warehousing to overcome shipping issues in Nigeria, where goods don’t move as fast as they do in South Africa.

“The choice of clearing agents is important and there is often a price attached to clearing goods,” said Sander.

Yet, with all these challenges, Nigeria’s retail opportunities keep on growing on the back of mass urbanisation, the emerging middleclass, rising retail awareness and an increasing consumer culture.

“For retailers who are prepared to develop a country-specific model and invest in research to support a supply chain, the right stock, the best price and service, there’s a bright future in Nigeria,” said Sander.

He added that right now there’s a massive gap in the market for homeware retailers.

He said Broll is increasingly being called upon for its professional property services and insights to support retailers and property owners alike seeking to unlock the many retail opportunities in Nigeria.

“The market and spend needed for retail success is here and growing. Retailers wanting to crack this market need to customise their models to meet the unique consumer needs and aspirations.”

“Nigerians enjoy a first-world shopping environment that is pleasant, safe, cool, unrushed and offers a complete retail experience from shopping to relaxing at the food court. Mall dwell times are increasing and foot counts are growing.”

Sander offered a few suggestions that Broll has picked up for retailers planning to enter the Nigerian market, starting with using a cash-based model initially, rather than counting on sales from accounts or cards.

He said that there is little, if any, brand recognition for South African retailers in Nigeria, where consumers are more familiar with US and European retailers. This requires a marketing strategy that goes beyond advertising store opening and extends to launching a new brand.

The markets’ buying patterns are also different to what South African retailers are used to.

For fashion, there’s no seasonal shopping – Nigeria is hot year round. Sizes are also important and different to Europe and South Africa. Some 50% of men’s shoe sales are sizes larger than size 10. And, while there’s a market for luxury goods, prices that are noticeably above those of Europe won’t be tolerated.

With the mobile phone boom in Nigeria, and an increasingly tech-savvy population, Sander says digital and social media marketing are effective tools for retailers.

“Offering guarantees and sticking to these promises is a tremendous way of growing customer loyalty,” says Sander. “We’ve also found that give-away events enjoy great participation at Ikeja City Mall. At first journalists were genuinely surprised to find that these were fair and above board.”

Despite all the opportunity, Sander cautioned that retail in Nigeria is not for sissies.

news@ujuh.co.za

 

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