How Local affinity strengthened FoodCo Stores in Nigeria’s formal retail market
Between 1960s and now, Nigerian formal retail market has witnessed entry and exit of various stores. In the last 10 years, the formal retail market is re-emerging strongly due to a number of factors which include cashless transaction. But in the last 36 years, FoodCo stores, a local brand retail outlet with dominance in Ibadan, Oyo State of South West Nigeria is still growing strong. With one store in Jericho of Ibadan in 1982, it now has seven outlets, all domiciled in Ibadan. This report assesses the formal retail market and identified local affinity as FoodCo market strength.
With an estimated population of about 170 million people and rapid urbanization, Nigeria’s formal retail sector is widely acknowledged as an exciting and lucrative prospect for investors. Rising from the ashes of foreign owned chain stores like Leventis, UTC, Kingsway amongst others that ruled the organized retail space from the 60s-80s, the sub sector is witnessing a resurgence of sorts. The entry of foreign owned retail outlets like Shoprite, Spar, Game and others within the last 10 years seem to have infused a breath of fresh air. Local supermarket chains with branches scattered across the country are also joining the fray. These include brands like Addide, Best Choice, Good Price and a host of others largely positioned in the small neighbourhood store category. Currently, there are more than 20 of such local retail brands in operation across Nigeria and more are expected to spring up in the sector.
Presently, Nigeria’s informal retail sector, which comprises stalls, kiosks, open markets amongst others accounts for about 80 percent of the retail market but experts opine that the dominance may be fast eroding. In fact, The BusinessDay Nigerian Retail Sector Report, a report that x-rayed Nigeria’s retail sector, not only affirmed that the emergence of local and foreign owned retail chain stores and other structured retail outlets was not only eroding Nigeria’s traditional or informal retail space but the country has the capacity to support the entry of even more formal sector players. That was in 2014. Since then more retail chains have made their way into the market. Some of the factors responsible for the growth of the organized retail space are convenience, enhanced shoppers experience, neat and comfort, ambience, reasonable guarantee of top-quality products amongst others. However, for most players, the real battle ground is in pricing. Indeed, the cost element has become one of the strongest weapons the retail outlets deploy in their quest to win the pocket share of consumers.
Still, most of the operators have had to dig deep and seek out other creative ways of staying ahead of competition. Take FoodCo Nigeria limited, a diversified consumer goods company with interests in retail, fast food and manufacturing, based in Ibadan, Oyo State. Established back in 1982 as a fresh food store providing meat and chicken, FoodCo is today one of the top-10 leading supermarkets chains across the country and the second largest supermarket chain in South-West, Nigeria, outside of Lagos. Additionally, it is the number-one retail chain in Ibadan and, by extension, Oyo State.
Over its 36-year-old history in Ibadan, FoodCo has forged a strong equity for itself, one that has endeared it to the people of city. It would appear that the special connection with the people of the city is one of the brand’s biggest strength, especially in a highly competitive market like Ibadan. FoodCo recently opened a new outlet in Akobo area of Ibadan, increasing its chain of stores to seven outlets in the city. The throng of people that trooped to the new outlet was testimony of the brand’s popularity in Ibadan. And the crowd wasn’t just there to witness the birth of another FoodCo baby into the boisterous city. For most of the day, the supermarket complex was busy as the sales attendants could barely keep up with the demands of the customers trying to take advantage in on the bargain deals on offer.
Speaking on FoodCo’s longevity, Ade Sun-Bashorun, Executive Director of FoodCo Nigeria Limited stated that the supermarket and its fast food arm has been able to serve generations of families residing in Ibadan. He said: The longevity of our business has allowed us to serve families for generations. Now we have almost a third generation of families that are now our customers. So customers who were young mothers or young folks in the 80s when we started, their children grew up shopping here and more importantly they grew up socializing. Now they have children who are 10, 12, 14 and those children also are shopping here.
According to him, the brand’s longevity has allowed it to build not just professional relationships but also personal relationships with customers. He said: “Affordability, quality products and convenience are really the elements we are driving on to deliver on this vision. But for us it’s beyond just growing an enterprise. It’s about what we do for our people and for our communities. So we spend a lot of time and energy training staff, helping them develop, putting tools in place for them to continue their education and we also spend a lot of time and energy for our communities and things we can do to develop them and make contributions back to them for supporting us.
We have been able to provide such a large array of products and more importantly at very affordable prices not only because it is a core of our strategy but also because since we have been around now for 36 years, we have a deep history with over 300 suppliers who range from large, national manufacturers as well importers of the variety of goods which we don’t procure or produce locally.
Some of trade partners commended Foodco for weathering the environmental storm in the last 36 years, serving customers. Dayo Omoluyi, territory sales manager for Reckitt Benckiser in Oyo State said Reckitt Benckiser has been partnering with FoodCo since the birth of the food company. The partnership with FoodCo has been good because FoodCo is another outlet for the multinational company to serve the customers.
Imogiri Eriaka, channel manager for West region, Unilever said with super market channel coming up as a modern trade business Unilever focuses more on top chain outlets like FoodCo that has many branches saying that since January, 2018 FoodCo business has doubled in size with Unilever. Also Kayode Olalekan, sales development manager for Cadbury South West said the partnership with FoodCo has been successful. “Today FoodCo business is fast growing and I see FoodCo as Nigerian Walmart as it is ready to expand beyond the South West region.
The company identifies its strong brand equity with the people and it is leveraging that strength to be the foremost retailer of consumer products in South-West Nigeria and beyond.
As formal retail market evolves, price, quality of products and convenience will continue to strengthen relationship and create traction to consumers.