Must-haves, sophisticated tastedrive demand

With the aspirational tastes and lifestyles of Nigeria’s expanding middle class , big stores are making exponential sales in the country.

The ambience of the shops, the haggle-free transactions , the comparatively lower prices and the multiplicity of goods and services on offer, are attractions that consumers  simply cannot resist.

The shops are structured to reduce shopping time, offer relatively lower prices  and give quality assurance.

With Nigeria‘s current attraction to foreign companies and multinationals, consumers are exposed to a wider range of products—including the private labels of some of the biggest companies.

Traditional grocery retailers have also increased the stocks and range of non-grocery items including clothes and footwear, consumer electronics and appliances, books, toys and home care products, furniture and furnishings, etc.

Demand for the basics or must-haves  is still far greater than items perceived to be luxury goods.

Growth has also remained strong and steady for the processed and packaged food market in Nigeria. The increase is resulting from advertising and marketing activities of firms which have increasingly been targeted at the sophisticated tastes of the upper end of the market.

The big shops which are usually known for groceries are also fast expanding to non-grocery items such as house hold items, clothing, furniture and appliances/electronics to expand their share in the nation’s retail market which is currently dominated by informal retailers.

BusinessDay checks of small and big stores reveal that prices vary according to commodities. Some items are sold cheaper in smaller stores than bigger shops and vice versa.

A shopper, Sarah Adeyinka confirmed that over time she has discovered that some items cost less in small and traditional open markets than in the big modern shops. For instance,  the tissue paper she buys for between  N70 and N100 in a small shop in her environs, goes for N350 in Mega Plaza.

“It’s not everything that I buy from the big shops. You find out that the other smaller shops and open markets still sell cheaper. I patronise them mostly because of the convenience and fun they provide to the shopping experience,” Adeyinka said.

For Maryjoy Ukah, she cannot buy items like children’s toys in the big shops which she alleges are inferior products imported and sold very costly to unsuspecting Nigerian consumers.

“Shopping in the big retail shops is very convenient; I can afford to dash in from the office and pick some items without sweating, unlike when I go to the open markets. But there are things I cannot buy there because they are very expensive and sometimes inferior; I usually make out time on weekends to go to the market where I can get enough variety and at cheaper rates.

People actually go to these big stores or the open markets to purchase items because of their relatively low prices, while others prefer them for a quality shopping experience.

“The retail industry in Nigeria has steadily become more organised, largely driven by the efforts of some state governments to ban street trading, revitalise city centres and modernise trading standards.

This is however unlikely to lead to the complete disappearance of the informal channels. Three trading platforms are expected to co-exist side by side in Nigeria in the five years.

These are the traditional open

markets or street traders, the semi-formal modernised markets and, finally, the western-style shopping centres or formal retail outlets. Formal retailing is also expected to continue to increase its share of the entire retailing industry over the forecast period,” according to report.

Industry analysts have maintained that the existence of the informal retail sector will not be threatened, instead operators would bring in innovations to retain their market share.

They are also seeing a situation where the informal sector will sustain its dominance with the ability to offer lower prices than the big shops who have invested much to achieve international standard.

Modern grocery retailers suffer from high operational costs. The illegality of the operations of the small shops puts modern grocery retailers at a distinct disadvantage. Modern retailers have higher fixed costs; they cannot easily evade taxes because of their visibility and they have to source their supplies from legitimate channels.

They are also hampered by the fact that as they are still few in number, there is not as yet a strongly organised local supply chain infrastructure that enables them to benefit from economies of scale.

By: Anne Agbaje