International Retail Stores Woo Low-Income Nigerian Shoppers

store-360x224International retail stores have found a way of attracting low-income Nigerians who now constitute the bulk of their customers, Anna Okon writes
In Nigeria, a country where the average income is below two dollars a day and where the majority of consumers live below the poverty line, international retail outlets have discovered a huge clientele base among people with meagre earnings.
By simply bringing prices down to the level of the bottom-of-the-ladder shoppers, the stores have been rewarded with huge and unprecedented patronage.
There is no gainsaying that Nigerians, whether rich or poor, love to shop. The newer the model of the product, the bigger their appetite and international retail stores have leveraged on this attitude.
China, a few years ago, reaped from Nigerian shoppers, but products from that country have since fallen out of favour due to widespread complaints about faking.
Now shoppers find solace in international retail outlets like Shoprite, Nando, Pep Stores and others. These are places where everything can be found under one roof and where most items sell at least one naira less than what can be obtained from the open market or other shops. Also, the authenticity and durability of products from these stores are incontestable.
As the managing director of Pep in the 1970s, the Chief Executive Officer of Shoprite, Whitey Basson, was exposed to Pep’s retail model – which aimed to provide quality, durable clothing at deeply discounted prices- and this influenced his long term vision for Shoprite. “We wanted to provide millions of customers with everyday low prices on everyday goods. On basic foods, our prices would be the lowest,” he noted.
The strategy is paying off and attracting crowd of shoppers to the firm’s countless retail outlets spread all over the continent including major cities in Nigeria.
With N500 or less, an average shopper in Lagos can shop where the rich shop, in expansive glittering air-conditioned shopping malls where there are also numerous eye candies to feed the eyes. “We are prepared to sacrifice profits to remain the cheapest food retailer in South Africa. We can’t afford to let that area of our branding slip,” Basson said in a recent interview.
According to analysts, Basson is a businessman who knows his customer and which market segment to target. Also he does not cut down or change as the economic cycle progresses.
International clothing retailer, Pepkor, has been expanding in Nigeria since its debut in 2012. The company recently announced plans to open 10 additional stores in Nigeria before 2018.
The General Manager, Pepkor, Deon Conradie, had earlier indicated plans by the company to open up 31 more stores by July 2015. He admitted that the middle-to-bottom market was the fastest growing segment of the Nigerian consumer market.
At Pep Stores, one can buy a pair of quality footwear for as low as N1,000 or N1,500.
“‘Our prices are low and we cater for that middle-to-bottom market, which is the fastest growing, there’s a need for somebody to supply that market,’’ he told Bloomberg in a recent interview.
Nigerians’ demand for goods other than food is expected to increase to $110bn by 2030 from $20bn two years ago.
The huge success recorded by international retail outlets in Lagos has inspired establishment of shopping malls in more Nigerian cities including Ilorin, Enugu, Aba, Port Harcourt, and others.
Entry into the Nigerian market requires relatively high capital investment due to inflated rental and power costs, according to Conradie.
Woolworths, a retailer that targets wealthier consumers, said in 2013 it would close its three Nigerian stores because of costs and difficulties in getting products to shops. ‘‘It can sometimes take three to four years to be profitable in these environments,” Conradie, who also worked in Angola, reportedly said.
There had been concerns in the past that international retail shops posed a threat to local industries but analysts argued that patronising these retail outlets would lead to demand for Nigerian products.
The Head, Research and Intelligence, BGL Plc, Mr. Olufemi Ademola, had noted in an interview that the rising profile of international retailers in Nigeria was capable of spurring local investment and competition.
But contrary to such expectations, while the international retail shops are flourishing, Nigerian businesses, faced with very hostile operating environment, are shutting down.
A lecturer in the Department of Economics, University of Calabar, Joe Eba, described the dominance of international retail stores in the country as commercial capitalism, a system where nations preferred to sell to other nations in order to make more money.
He said, “These malls are part of commercial capitalism. They have captured all the developing countries in terms of what people like to consume.
“Local industries die as a result of the existence of these malls. Africans no longer patronise roadside vendors because the international retailers have changed the psychology of consumers and they have adapted their products to the taste of the local consumer.”
He added, “an average Nigerian who bought akara from local vendors now prefers to eat meat pie and pizza in a flamboyantly designed shopping mall.
“It has to do with the psychology of the people. Nigerians prefer other people’s items to their own. It is time for us to start believing in our local content.
“The National Orientation Agency should rise to the task and enforce the local content rule on the people. The government should also ensure that Nigerians hold majority shares in these companies so that they don’t cheat us.”

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