International superstores, emerging middle class driving Nigeria’s retail industry – Analysts

Changes continue to occur in Nigerian grocery retailing due to the increasing number of supermarkets and hypermarkets, which have traditionally accounted for 1 percent of total retailing, as the environment continues to move slowly from traditional to modern retailing.

Euromonitor international report reveals that traditional grocery retailers have increased their ranges of non-grocery items. This is due to increased purchasing power of Nigerians as a result of economic growth in recent years, particularly in banking and telecommunications. The re-emergence of the middle-class consumer who demands more than the usual grocery items has further enhanced growth in this aspect.

Besides groceries, grocery retailers sell items such as clothing and footwear, consumer electronics and appliances, books, stationeries, toys, personal and home care products, as well as household furniture and furnishings.

In 2014, formal retailing continued to increase its share of the overall retailing industry over the forecast period. In 2011 and 2012, new international retailers like Woolworths, Mr Price and Hawes & Curtis entered the market, while Shoprite, Spar and Game continued to expand.

Artee Industries Limited led grocery retailing in the country in 2012 because it has the highest number of outlets in the country through its nine Park ‘n’ Shop stores and four Spar outlets.

Acknowledgments to strong growth in number of outlets, which are also larger in terms of selling space, Retail Supermarkets Nigeria Limited (owned by Shoprite Holdings Limited) follows closely behind. Both companies held less than a one percent value share in 2012.

Euromonitor international observed that grocery retailing in Nigeria has remained fragmented due to the high number of small outlets, in traditional grocery retailing in particular. The development of modern grocery retailing has remained positive for the growth of overall retailing, given the fact that the market is witnessing a decline in low-value and tax-avoiding informal retailing.

Non-grocery segment

Non-grocery retail saw improved growth in 2012 thanks to the expansion of international chains in apparel specialist retailers, driven by removal of the import ban on textiles and furniture in 2010.Thus, following the entry of retailers such as Etam in 2011, in 2012 Mr Price, Woolworths, and Hawes & Curtis also entered the Nigerian market.

Other channels such as home and garden specialist retailers are also thriving thanks to increased demand from a growing middle-class which is becoming more sophisticated in its shopping tastes. Exclusive Stores Limited continued to lead non-grocery in 2012 with a value share of 2%. Its seven outlets stock a wide variety of non-grocery items.

With the recent launches over 2011/2012 of new international chains, such as Woolworths and Mr Price, it is likely that many more outlets will be opened over the forecast period. As retailers take advantage of the lifting of the ban on the importation of textiles and furniture, the channel is anticipated good prospects over the forecast period, with a constant value compound annual growth rate (CAGR) of 4 percent.

International chains

In 2011 and 2012, Retail Supermarkets Nigeria Ltd, the national brand owner of Shoprite, opened more stores in Nigeria, thus widening its national presence, while Artee Industries Ltd, the Nigerian partner of Internationale Spar Centrale BV, opened another Spar outlet in 2012.

Following the acquisition of Game’s Massmart Holding Ltd by Wal-Mart Stores Inc, the company has begun its own expansion, opening another store at the end of 2011. There was also a great deal of activity in the apparel specialist retailers channel as new international players entered Nigeria in 2012.

Strong growth expected

Analysts believe the retail industry is expected to experience strong and steady growth over the forecast period. The large and growing Nigerian population will provide steady and ever-growing demand for retail products.

In addition, the expected expansion and entry of international retailers will continue to drive growth. However, increasing rate of urbanisation and positive economic outlook for the country as a whole are also factors expected to boost the retailing industry in Nigeria.

Anne Agbaje