Sophistication driving consumer necessities

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 stock and range of non-grocery items they offer to include clothes and footwear, electronics and appliances, books, toys, personal and home care products, household furniture and furnishings, etc.

The demand for the basics or must-haves is still far greater than items perceived to be luxury. 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 that 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 household items, clothing, furniture, and appliances/electronics to expand their share in the nation’s retail market currently dominated by the informal retailers.

BusinessDay survey of small and big stores reveals that prices vary according to commodities; some items are sold cheaper in smaller stores than bigger shops and vice versa.

Sarah Adeyinka, a consumer in Amuwo-Odofin, confirms that over time she has discovered that some items cost lower in small and traditional open markets than the big modern shops. For instance, serviette paper she buys between the price of N100 and N120 in a small shop around where she lives goes for about N200 in mega plaza.

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

For Cecilia Madu, another consumer, 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,” according to Madu.

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, however, is unlikely to lead to the complete disappearance of the informal channel. Three trading platforms are expected to co-exist side by side in Nigeria from the next 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 a 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 standards.

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.

With increasing taste of Nigerian consumers among the elite and middle class, big stores are making it big in the country. Consumers now enjoy the convenience that comes with shopping at super stores.

The ambience inside the shops and haggle-free purchase system that reduces shopping time, relatively lower price for some items and quality assurance that items can be easily returned if otherwise, add to consumers appeal for shopping.