Economics of sound system, fridge and television ownership
The maiden BusinessDay Research RMS TNS Consumer Confidence shows that a minimum of 1 in 2 Nigerians owns a sound system. The survey covered over 5,000 Nigerians spread across the 36 states of the federation and Abuja. The survey did not go into details to examine the brand of sound system owned, whether it was bought new or second hand. But it showed that 56 percent of respondents owned a sound system and it was the most frequently-owned item by Nigerians.
Fridge was the next most frequently-owned item with a 49-percent penetration rate. A significant 29 percent of respondents, however, owned a flat screen television, while 26 percent owned a deep freezer in their homes.
When ownership of sound systems is analysed based on the age of respondents, it shows that only 3 percent of those in the age bracket 18-20 years own a sound system. Sound system ownership increases to 21 percent for those in the age bracket of 21-25 years, and 29 percent for those in the age bracket of 26-30 years. The highest concentration of sound system ownership is in the age bracket of 31-40 years with 32 percent of respondents claiming to own a sound system, while only 16 percent of those in the age bracket of 41-50 years own a sound system compared to just 3 percent of those who are 51 years and above.
The implication of the age bracket analysis of the sound system ownership is that a sound system is most likely the first item acquired by Nigerians as they enter adulthood. It seems to command the place of the first status-symbol item at home for most Nigerians. One reason why sound system may be the first item of acquisition is that it is cheaper to buy than a television set. There is also variety in the market with price ranges that are affordable to the different income groups in the society.
Not surprisingly, fridge emerges as the next most frequently-owned item for respondents. Research has shown that refrigerators are usually the first item bought by the poor as their financial conditions improve. In a warm climate like Nigeria, refrigerators are even more essential considering the need to preserve foodstuff and also to get cold water. Refrigerators are, however, more expensive to acquire than a typical sound system which has more of entertainment than utility value. For most low income Nigerians, they would rather buy a refrigerator than a sound system, but cost may be the challenge.
Another challenge that may affect ownership of a refrigerator is access to electricity. An average of 50 percent of Nigerians are said not to have access to electricity. Refrigerators run mainly on electricity, so this could impact on the decision to get one or not. A sound system, however, can run on dry cell batteries, another reason it is in more Nigerian homes than refrigerators. It will be interesting to see the trend of ownership dynamics as BusinessDay Research TNS releases on a quarterly basis the results of its survey.
Also interesting in the report is the ownership concentration for flat screen television among those in the 31-40 years age bracket with 41 percent of them claiming to own a flat screen television, while 37 percent of respondents in the same age bracket claim to own a washing machine. For business operators looking for an age profile for Nigeria’s middle income, this is it. This is the group that is rich at 40. They have the purchasing power and therefore can afford the modern conveniences that come with it. They are likely to have kids who are in school and some about entering school. They travel for holidays and most likely are dreaming of owning a house.
Though 29 percent of respondents owned a flat screen television, only 16 percent of respondents owned a Blackberry or other similar smartphones, while only 14 percent own a laptop. The survey also shows that only 10 percent of respondents claimed to own an oven-type gas cooker, a similar percentage with those who claimed to also have a table-top cooker. Only 9 percent of respondents owned a washing machine, while the least-owned item was an iPad or tablet with just 1 percent of respondents claiming to own any.
The signal that this ownership pattern sends to businesses is that the top end of Nigerian middle class is quite tight. For example, 25 percent of US adults are said to own a tablet as at 2012, according to a Pew Research Center report of September 2012, while 61 percent had a laptop and 45 percent had a smartphone. Twenty-two percent of respondents claim not to own any of the items listed in the survey.
Fridge also emerged as the most-purchased item by Nigerians in the last three months with 10 percent of respondents claiming to have bought the item within the period. A similar 10 percent also claimed to have bought a sound system in the last three months, while 8 percent of respondents claimed to have purchased a flat screen television within the same period. Deep freezer was the fourth most-purchased item by respondents in the previous three months to the survey with 7 percent of respondents claiming to have bought a deep freezer within that period.
Sellers of electronic items should take note. These are the hottest-selling electronic items in the market currently. Any seller not stocking these items is missing out on a growing market that is expected to accelerate as soon as electricity generation stabilises.
Only 5 percent of respondents claim to have bought a laptop within the last three months, 3 percent said they bought a table-top gas cooker, 3 percent also said they bought a microwave oven, 2 percent said they bought an oven gas cooker, 2 percent bought a washing machine, while only 1 percent claimed to have purchased an iPad/Tablet within the period. Flat screen emerged as the item most respondents would want to buy in the next three months, while 14 percent of respondents expressed a desire to buy a laptop within the same period. Flat screen television set sellers and laptop sellers should position for a boom.
Our survey also found four other items that consumers desire to purchase in the next three to six months. For businesses, however, the challenge is in knowing what brands move the market and what features consumers are looking at in purchasing these brands. Our survey provides some insights.
Anthony Osae-Brown
NOTE: If you are interested in finding out the top 25 best-performing CEOs of 2012 who made our cut and business strategies behind the significant rise in their company’s share price, keep a date with BusinessDay on April 4, 2013. (Apologies for the change in publication date.)
If you want analysis or data on any company or any particular sector of the Nigerian economy or industry or have any other queries that BusinessDay Research Unit can help you with, kindly send a mail to research@s19080.p615.sites.pressdns.com/en or call 08185193932. We can also help you with your confidential market surveys and competition analysis at a cost.