The Nigerian retail environment has been tough and scotching the expectations of manufacturers as they grapple with stiff competition, currency devaluation, hike in fuel price, decrepit infrastructure, and inflationary pressures.
To overcome these challenges Nielsen Nigeria, a subsidiary of the British information, data and measurement firm that studies consumers in more than 100 countries, identified in a recent report ways retailers and manufacturers can beat the odds as Nigeria’s landscape is set for multiple shifts.
“Everyone is fighting for growth and competition for consumers’ wallets has never been tougher. In a challenging environment, finding opportunities with the right insights become key to help beat the odds,” said Ged Nooy, managing director and CEO of Nielsen Nigeria.
Nielsen reckons marketers need to cater to the demands of those who want value and at the same time those who are aspirational and want quality, premium products.
According to them, Nigeria is a complex market characterised by consumers who are upbeat and confident, with 81 percent feeling good or excellent about the state of their financials, while at the same time 60 percent say they can only afford the basics.
Nielsen argues that it is paramount for operators to understand consumer attitudes and perceptions and how they make choices, as 88 percent of consumers across Africa and the Middle East are ready to defect from a current brand choice and 45 percent consumers say they love to try new things.
“Opportunities are about understanding and delivering what consumers need and want. Times are changing. There are more products on the shelf today than ever before, from new and existing brands, and a plethora of information points, advocates and advertising telling consumers about them,” said Nooy.
The retail and manufacturing industries have not recovered from the recession of 2016 that stoked severe dollar scarcity and paralysed business activities.
Inflation pressure, devaluation of the currency, and hike in fuel price has subdued consumer spending, while over 50 perceent of a population of 200 million live on less than $1.98 a day. Little wonder unemployment rate is at an all-time high of 23 percent.
According to a recent report by the National Bureau of Statistics (NBS), Nigeria’s gross domestic product (GDP) expanded by 1.94 percent in the second quarter of (Q2-2019), from the revised first quarter (Q1-2019) print of 2.10 percent.
The trade sector which comprises of whole and retail trade contracted by 0.25 percent in the second quarter (Q2) of 2019, after recording three positive growth rates since the third quarter of (Q3 2018).
“Companies have not been able to make money in the past five years because consumer wallets are pressured, as the inability to hike the price of key products is undermining sales,” said Abiola Abimbola, analyst with Chapel Hill Denham Limited.
The low cost and low price competitions are cannibalising the sales of established players as a harsh and unpredictable macroeconomic environment have forced consumers to downgrade to cheap and affordable brands.
In just 10 years, Nigeria’s brick-and-mortar fast-moving consumer goods (FMCG) universe has nearly doubled in size.
There are more than 1 million outlets selling FMCG products, increasing in size by 500,000 outlets in less than 10 years, the Nielsen Shopper Trends report notes
“It is also interesting to note that 50 percent of FMCG sales come from 60 LGAs (local government areas) in Nigeria. Given this retail landscape, the need is for precise and efficient distribution and trade strategies,” said the report.
New and existing unlisted companies have access to equity capital, as they continue to pursue an aggressive expansion plan with a view to increasing their share of the market.
Analysts at Nielsen say the future of retail is not limited to physical stores or virtual channels and that streamlined services, digital experiences and frictionless commerce are converging with the brick-and-mortar and e-commerce worlds set to shape new shopping experiences.
According to Nielsen Shopper Trends syndicated study, Nigerians shop 30 times per month and they want value and assortment when they shop.
“They are also price-conscious, with more than 70 percent aware of prices and 95 percent noticing price changes,” Nielsen notes.