Nigeria’s Retail Outlets Rise from 800,000 to 1.2m In 4 Years

(Sundiata Post) – Latest consumer market information by Nielsen, a global research and measurement company that studies consumers across markets, reveals that the number of retail outlets in Nigeria increased phenomenally from 800,000 to 1.2 million between 2014 and 2017.

The development gives credence to the dominance of traditional trade formats like open markets and kiosks in Nigeria, as consumers, perhaps due to economic circumstances and choice still prefer traditional trade formats in spite of its inconvenience.

Despite the prevalence of these traditional channels, the Nielsen Nigeria Shopper Trends 2017 report further reveals that modern trade formats like supermarkets and hypermarkets are stepping up to fulfil needs of consumers.

According to the officials of Nielsen, the increase in retail outlets in the last four years is largely accounted for by unemployment and job losses, which push the unemployed to become entrepreneurs.

Further explaining the reasons for the phenomenal increase in the number of retail outlets in Nigeria to BusinessDay after his presentation on the Nielsen Shopping Trends to brand managers in Lagos recently, Pradipta Mitra, director, Consumer Insight in Nielsen, believes that in a developing country, when there is high unemployment, people engage in self entrepreneurship. Therefore, people set up many retail outlets. Most of them are small in neighbourhoods, container shops and kiosks.

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According to Mitra, in the last one year, some entrepreneurs have closed shops while others diversified into selling something else, as the increase in number of shops between 2014 and 2017 means increase in more logistics for manufacturing companies to reach them. However, the development creates jobs, he says.

The report further shows that consumers who visit supermarkets account for 26 per cent of total spend, while 76 per cent of consumers shop in open markets and average shoppers frequent these outlets 10 times a month or twice a week.

Mitra explains that due to economic environment, consumers who use to purchase in large quantity are now purchasing sachet and in small quantities, and shoppers are now going many times a month to neighbourhood shops to buy things in small quantities unlike before. “The frequency to shops has increased as they buy small,” he says.

However, Mitra, whose presentation was on ‘winning with the Nigerian shopper,’ says the report found that shoppers are both brand loyal as well as price sensitive, saying, “What this means is that consumers are staying with their brands but they are trimming down on the pack size.”

Abhik Gupta, managing director, East and W/Africa at Nielsen, says the objective of the report presentation conduced in 50 countries is to let both retailers and manufacturers understand what is happening in the retail space, as “this means the dynamics that we see and response of the shoppers to various changes in the environment.”

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The report gives guidance to both the manufacturer and retailer on how they need to cater for the aspiration of the customers and attract them to their stores.

The managing director of UAC Foods Limited, Chidi Okoro, who participated in the session, tells BusinessDay that from the presentation, the consumer/shopper environment is evolving fast but reduced income levels and inflation challenge the consumer, and as such choice made at point of purchase becomes important.

Okoro says the manufacturers therefore need to be a lot more flexible in making sure they design the right route to market that will take into cognizance these evolution and changes.

“We also need to factor in the cost of reaching out to the customer in addition to considering devaluation, fuel price, transportation and the shopper who does not want to travel far to buy. There should therefore be complete thinking on reaching out to the consumer. Strategic and flexible thinking is therefore desired”, he said. (BusinessDay)

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