For stakeholders, Retail Council offers untapped benefits

Nigeria’s retail industry is growing and this is informed by the country’s large population, which is alluring to both foreign and local investors. In view of this, and with the birth of Retail Council of Nigeria (RCN), the retail market is becoming organised. But this is yet to be embraced by most players in the industry. Daniel Obi assesses the positive impacts of organised retail industry.

All over the world, systems are becoming more organised for overall economic growth. This has become important in a market like Nigeria where the informal sector accounts for about 70 percent of the GDP. Most of the operators in the informal sector are in the retail segment.

Unfortunately, until the launching the RCN in November last year, which is yet to take off fully, the retail segment, also comprising the big players like the telecom companies, banks, the FMCGs, online market operators, departmental stores and service companies, was a rat race and had no voice.

In various economies like in South Africa, the UK, US, Australia, among others, retail council under different names is established by the private sector as a forum for operators to engage themselves on common issues. It is a collaborative body that assists retailers to exchange business information, identify and deal with business challenges. The council is a voice of retailers, as it becomes a lobbyist organ for favourable policy and tackling issues like port clearance delays, multiple taxation, assisting in dealing with fake products by members and advising government on issues for the interest of the economy and consumers.

It is the service end point between the manufacturer and the consumer. The manufacturer will fold up if the products do not get to the consumer, and the organised retail has much more positive impact on the economy.

It is said that the economic growth has direct correlation with organised retail industry. But government is yet to strongly push for the strengthening of the body in spite of its inherent benefits. Under an organised retail sector, government revenue is expected to increase as members would be encouraged to pay tax.

Formation of RCN

In spite of its potential to spur economic growth, the retail sector in Nigeria has remained unorganised. Even some operators in the segment know little about retail council and its benefits to them or the economy. It was in the absence of retail council in Nigeria and failure to tap its benefits that BusinessDay in conjunction with other stakeholders convened the first-ever retail council in November last year.

The forum led to the launching of RCN, a body whose mission is to formulate, facilitate, and propagate practices and processes in line with international best practices so as to grow the Nigerian retail sector, leading to increased consumption, a boost in production, employment generation, and ultimately, the growth of the economy.

Organised retail industry is structured. There are also complete regulated products and services, products/services compliance to standard specification is high. In an organised retail market there is strict control and monitor of counterfeit. Employment is also high in the organised retail market. All these do not exist in informal market.

BusinessDay and other stakeholders strongly believe that the formalisation of the retail market will create a boost in the retail sector, impact positively on the growth of the economy.

A recent BusinessDay research shows that organised retail has a great impact on economic growth. In both the US and Britain, for instance, organised retail contributes about 80 percent to economic growth, according to the findings, while it contributes 66 percent in Japan, 78 percent in Australia, 10 percent in India, but only a paltry 3 percent in Nigeria.

The research further states that 27 percent of the global GDP is contributed by organised retail. “Across the globe, retail employs 17.1 percent of the workable population and in the US it accounts for 14 percent. Organised retail supports the development of various sectors across the economic environs of the country and it assists to conserve foreign exchange,” it says, adding that organised retail would increase the revenue base for the government.

Olusegun Aganga, minister of industry, trade and investment, was quoted as saying at the inauguration of the RCN, that over the last two years, “the Nigerian retail market attracted over $1.3 billion (N250bn) in investments into the retail space,” saying globally, retail trade accounted for 27 percent of the world’s GDP, which means a $19 trillion of retail sales each year. The retail sector also employs 17 percent of the global workforce, which is about 800 million people. In the US, one in every 10 persons works in the retail sector. “If the retail sector is the sector to grow, then, Nigeria is the market to be,” said Aganga, as “there is simply no better retail market right now than the Nigerian market,” describing Nigeria as a retailers’ delight, a country with consumer spending well in excess of $100 billion a year and a fast-growing middle class.”

Impact of organised retail on sectors

On agriculture, the research notes that the current estimated yield loss is around 39 percent, primarily due to an inefficient value chain and cold chain, saying organised retail will help improve the efficiencies of the value chain, reduce wastage, and increase revenue, thereby effectively lowering inflation rates.

The research further says in the manufacturing sector, organised retail helps to increase the presence of brands in all categories, while the retail system facilitates launch of new products and concepts to test markets, leading to eventual set-up of local manufacturing facilities. The system also creates an improved platform for direct interaction with the consumers, it states.

Organised retail has impact on increase in consumer spending and finance, and increase in organised retail raises capital investment and project finance, the BusinessDay research adds.

Looking at retail and the technology industry, the research notes “technology is the backbone of organised retail,” adding that the boom in retail would give an impetus to the IT industry in spheres of both hardware and software development, while IT infrastructure facilitates a cashless economy.

Organised retail and tourism, the research notes, are interdependent, and in Nigeria would develop domestic tourism as well as the real estate and service industries.

Explaining further on the need to organise retail, the research says while in formal retail, compliance to international standards is mandatory, in open market trade, there is no compliance to international standards. Employment is low in open market trade; while counterfeiting is controlled and monitored in formal retail, it exists in open market trade.

Other objectives of the forum held in Abuja included to promote modern retailing in Nigeria to contribute its share to the GDP; facilitate the development of associated/allied sectors of the economy; provide a platform for networking and disseminating useful information and knowledge to members and the general public; create a database of members and encourage all members to adopt the right values, imbibe international best practices, wholesome practices, and good corporate governance in the conduct of their business.

Retail in other economies

Canada

Retail Council of Canada, according to reports, is a not-for-profit, industry-funded association representing more than 45,000 store fronts of all retail formats across Canada, including department, specialty, discount, independent stores, and online merchants. “RCC is a strong advocate for retailing in Canada and works with all levels of government and other stakeholders to support employment growth and career opportunities in retail, to promote and sustain retail investments in communities from coast-to-coast, and to enhance consumer choice and industry competitiveness. RCC also provides its members with a full range of services and programmes including education and training, benchmarking and best practices, networking, advocacy, and industry information.”