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Experts chart path to growth for Retail sector in Nigeria @ TRLC 2017
2017/06/30
Joseph

Experts at the just concluded 4th edition of the annual Retail Leaders Conference in Lagos have called on all stakeholders, particularly government to support the industry and guide it along the best transformation path so that retail can achieve its full potentials and contribute immensely to national employment and Gross Domestic Products (GDP) of Nigeria.

They implored Federal Government to provide basic infrastructures in order for the sector to fulfil its full potentials, emphasising that retail markets hold great potential to address the high unemployment rate in the country.

 

Seizing the momentum and building a retail brighter future

The President, Bervidson Retail Group and the Convener of the Conference, Mr. Joseph Ebata while delivering his welcome address on the topicSeizing the Momentum and Building a Retail Brighter Future” said the Retail industry in Nigeria has its story of a proud past and a bright future.

According to him, retail in Nigeria is evolving (as in most emerging economies) into the key driver and enabler of economic growth, adding that modern trade has remerged and grown by 12.5 CAGR over the last 15 years.

“Traditional trade is evolving (with Open Markets becoming ultra-modern markets) and growing. As Nigeria actively drives the diversification of the Economy, Retail is driving urban regeneration with Ultra-Modern International Mall springing forth in all Key Cities of Nigeria. With leisure and social opportunities, the Nigerian Retail landscape is evolving to provide lifestyle options that drives economic velocity and leads to urban transformation,” he said.

Ebata noted that Nigeria is indeed a retailer’s delight with a population of about 170 million people, over 80 million people living in its urban areas, consumer spending in excess of about $100 billion a year and a fast-growing middle class is definitely the most promising market on the African continent.

The retail industry in Nigeria, according to him is transforming and has become the delightsome bride of many entrepreneurs, particularly international retailers and investors seeking to do business in Africa.

He further stated that; “nationally there is momentum on the side of retail to become the engine of our national economic growth especially as the government actively seek to reposition the nation with emphasis on diversification of the economy. What is required is for all stakeholders including and particularly government to support the industry and guide it along the best transformation path so retail can achieve its full potentials of contributing to national employment and GDP and growth amongst others.

He also noted however, that retail in Nigeria is many challenges that the industry most overcome for it to fulfil its potential.

·         The industry has been the worst hit by the strictures and tightness in the Financial Industry,

        high and unpredictable (informal) exchange rate and the general lower volume of economic activities.

·         It is dealing with policy and institutional challenges in the areas of;

o          Regulatory and Trading Barriers

o          Underdeveloped Infrastructure

o          Limited Access to Retail Real Estate

o          Scant Consumer and Trade Insights

o          Limited Talent Pipeline

o          Inadequate Access to Finance

o          Poor Structure and Absence of International Best Practices .

He therefore called on all stakeholders at the Conference to proffer solutions to these and many other issues affecting the industry.

 

High interest rate, major killer of Nigeria retail sector

The President/Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN) Prof. Segun Ajibola, while speaking on the topic” Enhancing Retail: Bank Synergy for Greater Value Maximisation”,   identified high interest rate as the major killer of the Nigeria retail sector.

Ajibola said that the current interest rate regime in the country is not in supportive of the growth of the retail sector adding that banks now lend at the rate between 26 to 28 percent.

He urged the federal government to look into this issue and find a lasting solution that will benefit both the retail sector and the banks.

According to him, the concept of retailing started through street hacker, saying that street trading promotes retailing in Nigeria.

Nigeria, according to him is now transiting from traditional retail setting to a mega malls with South Africa Shoprite setting the pace.

Ajibola said Africa continues to established itself as the new retail frontier with a population of over 1.03 billion (15 percent of global population ), retail spending of almost $0.9 trillion (N144trillion) in 2013 and $1.8trillion economy which is expected to grow by 5.3 percent in 2014, stating that Africa is gradually becoming force to reckon. 

He identified poor infrastructure base, forex instability, legal system and inadequate security as the other factors militating against retail sector Nigeria. 

“For the efficient and functioning of the retail market in Nigeria, stakeholders support is essential. Banking sector being the lifeblood of any economy has a central role to play. Public and private partnership arrangement in infrastructural development is needed,” he said.

Ajibola noted that there is a need for funding support for Nigerian retailers, particularly made in Nigeria product.

According to Ajibola, “the retail market holds great potentials to address the high employment rate in the country. These potentials would only be realised if all stakeholders, public and private provide the environment for this sector. A win-win situation is achievable between the banking industry and the retail sector through the development of tailor-made products and serviceable banks for the retail sector. Regular knowledge sharing platforms should be created between the banking industry and the retail sector for stakeholders to understand each party with a view to jointly work out modalities for addressing them.”

He said the banking sector must be there to be partnership in progress for the retail sector.

 

 Retail and Nigerian Made Goods: An unexploited Goldmine

Speaking on the topic “Retail and Nigerian Made Goods: An unexploited Goldmine” at the conference, the former Managing Director/Chief Executive Officer, Bank of Industry (BOI) Mr Waheed Olagunju disclosed that retail in Nigeria contribute 7 percent to national employment, noting that Nigeria has the largest mobile supermarkets in the world.

Olagunju represented by BOI Divisional Head (South), Small and Medium Enterprises, Abdul-Ganiyu Mohammed said demand for locally made product would increase when adequate measures are put in place.

While speaking on how profitable growth in Nigeria’s retail sector can be unlocked, Olagunju advised retailers to strive to understand their customers.

He stated further that; “ retailers need to define their proposition and ensure it stays relevant, make customers experience seamless, fast and efficient across their channels, invest in quality and technology and drive decisions through continuous analysis.

According to him, ease of doing business, taxation and protection of properties are part of some roles of government in retail sector.

Olagunju who called for capacity building programme for bankers on funding of the retail sector, also agitate for support for Nigerian retailers, particularly made in Nigeria product.

“The retail market holds great potentials to address the high unemployment rate in the country. These potentials are only realizable if all stakeholders, both public and private provide a suitable environment for this sector. A win-win situation are achievable between the banking industry and the retail sector through the development of tailor-made products and services by banks for the retail sector. Regular knowledge sharing platforms should be created between the banking industry and the retail sector for stakeholders to understand each party with a view to jointly working out modalities for addressing them,” he said.

 

Retail sector has the capacity to absorb unemployed youths

Speaking at the conference on the topic, “Supporting Retail to Create Economic Momentum,” Consul General, South Africa Consulate, Darkey Africa who was the Special Guest of Honour and Lead Keynote Speaker, said the retail sector has the capacity to absorb young people and solve problems of unemployment.

He said that there is link between infrastructure and the performance of the retail sector, adding that government must strive to provide infrastructures needed by the sector to enable the sector to fulfil its potentials

He said that the next chapter of emerging middle class growth would be the retail sector fuelled by a new generation of Nigerian consumers.

 

Government should carry stakeholders along in policy formation

The Founder/ Chief Executive Officer of SLOT Limited, Mr. Nnamdi Ezeigbo urged governments at different levels to carry stakeholders in the sector along in policy formation.

Speaking on the topic “Retail – Our opportunities, Our Challenges, Our Potentials”, Ezeigbo also said that the major factors affecting the retail in Nigeria are external and internal challenges, adding that retailers should focus mainly on how they can solve their internal challenges.

He stated that the challenges of the sectors are cost of finance, cost of real estate, government policies, volatility of forex, geographical uncertainty, unstructured business environment, poor regulator, multiple taxation and infrastructural challenges among others.

Acoording to Ezeigbo, “the Nigeria retail market through any of the following factors can generate huge economic growth. The factors are foreign investment, franchising as a new space, joint venture, manufacturing in Nigeria, rising population density (creating new markets and new shopping experience), banking services and various payment options.”

 

Retail sector suffers 2.7% drop in customer spending

The Regional Managing Partner Ernst & Young (EY) West Africa, Mr. Henry Egbiki while delivering a paper on the topic “Retailing in a Post-Recession Economy- New Market Realities and Business” said in year 2016, the retail sector in Nigeria suffered 2.7 percent drop in customer spending.

Egbiki represented by Mr. Damilola Aloba revealed that high inflation and weak labour market are responsible for the drop in customer spending.

He disclosed that there was slowdown in new market entrants, adding that Foreign Direct Investment (FDI) declined by 27.2% in 2016 to $1billion.

While speaking on the future expectation of retail sector, Egbiki said working age population would rise to constitute over 50 percent of the population through year 2030.

According to him, consumer spending would increase by $50billion during 2010 to 2030, adding that per capital income would to reach $4.5billion by 2030.

 

Nigerian Retail Growth Opportunities and Strategies

The Managing Director East and West Africa, Nielsen Mr Abhik Gupta while speaking on the above topic said that the major reason why some brands failed in Africa is that those brands fail to distinguish themselves from others.

He noted that much of the growth is witnessed today in the retail sector is due to the trend of migration from rural areas toward cities where job opportunities are more plentiful.

Speaking on the strategies to win in retail, Abhik said that retailers should understand that shoppers’ expectations would continue to change, adding that they must be prepared to meet up with these expectations.

He advised retailers to expect competition from new and unexpected direction.

Abhik also advised retailers to match shoppers’ mission with online and offline offering, emphasising that they need to work on their online because that is the meeting point of today’s generation.

 

Technology is the backbone of all retail operation

Speaking at the special workshop of the conference “Driving Retail Outlet Footfall for Profitable Sales and Growth”, the Founder of Ruff ‘n’ Tumble Mrs. Adenike Ogunlesi said that technology is indeed the backbone of all nowadays retail operation.

Ogunlesi stated that merchandising and technology, financial planning and forecasting are part of the major strategies retailers can adopt to bring customers to their stores.

According to her, other strategies are; category and data management, merchandise allocation, store grading, modelling and space planning, merchandise replenishment, pricing and markdowns.     

She said that there is a need for retailers to know their customers and effective way to communicate with them.

 

76% of internet traffic comes through mobile

While speaking on “Driving retail outlet through mobile technology”, the Founder/ Chief Executive Officer of iConcepts, Mr. Ugo Okoye said that 76 percent of internet traffic comes through mobile, saying that retailers should make use of this medium to take their products to their consumers.

He said that retail stores that want to survive in this technology age must think about driving sales through mobile technology because 82 percent of smart phones users’ turns to their phones even while in stores, 98 percent of SMS are read, 29 percent of tweets are read and 20 percent of emails are opened. 

 

Retailers must understand their target audience and give them what they need

The Chief Executive Officer of Dressmeoutlet.com Mrs. Olatorera Oniru said at the conference that retailers must understand their target audience and give them what they need.

She also disclosed that 99 percent of Africans wear cloth, but we did not produce up to 95 percent of what we wear in Africa.

While noting that collaboration is a big part in retail, Oniru said collaboration has been part of their business at Dressmeoutlet.com.

 

Customer Experience – The New Battleground of Retail Success

The President, Bervidson Retail Group, convener of the annual Retail Leaders Conference, Mr. Joseph Ebata has said that poor customers’ experience impacts negatively on customer loyalty, retention, referral and advocacy, saying that this will lead to customer frustration.

Speaking on the topic “Customer Experience -The New Battleground of Retail Success” at the just concluded 4th edition of the annual Retail Leaders Conference in Lagos, Ebata noted that poor customer experience impacts negative on driving outlet footfall, sales and profitability.

He further stated that indifferent attitude to customers’ experiences will inevitably lead to churn and even worse negative advocacy.

He said customers’ experience is the single most exciting opportunity for today’s businesses success, and knowledgeable associates’ is the key to retailers’ successful execution of customers experience strategy.

“The critical role of retail associate in driving customers experience and sales is very important. Studies revealed that when customers are attended to, helped by professional and knowledgeable associates, 90 percent of customers are likely to buy, and 60 percent and more would buy more than they originally planned. 91 percent are more likely to shop again at that store when they leave satisfied and helped. Unfortunately, 90 percent cannot find a knowledgeable associate to help them and 85 percent leave without purchasing anything as a result,” he emphasized.

"As the battleground of retail success shifts to customer experience, how prepared are you? What experiences are you, your store and your associates (employees) creating for your customers? The time to change is now, otherwise, you may just become history!, Ebata concluded.