Nigeria Retail Sector Report 2014

The Nigerian Retail Report 2014/2015
1
2
Nigeria
Sector Report 2014/2015
3
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5
The Nigerian Retail Report 2014/2015 ACKNOWLEDGEMENTS
Acknowledgements
Obodo Ejiro
Senior Research Analyst
Tel.: +234 805 074 5774
Email: o.ejiro@businessdayonline.com
Peter Ehigiator
Senior Creative Artist
Tel.: +234 802 325 1964
Email: peter.ehigiator@businessdayonline.com
6
CONTENTS The Nigerian Retail Report 2014/2015
Contents Pages
Overview 09
The Nigerian Economy 10-12

• Oil and the Nigerian economy 13-14
• Manufacturing in Nigeria 15
• Social-economic characteristics of the population 16-18
• Rebasing and the new face of the economy 18-20
Developments In Africa’s Retail Market 21-24
Profiling Nigeria’s retail outlets 25-27
Classifying Nigeria retail outlets

• The traditional open market retail outlets 29
• Unit neighbourhood stores/supermarkets 29
• Multiple branch supermarket/franchises (convenience 30
stores)
• Mega supermarkets/shopping malls 30-31
• The Grocery Bazaar Model 32-33
• The Best Choice model 33
Nigeria’s retail power houses 34-39
Nigeria’s major retail markets

• Lagos, Ibadan and the South West 40-41
• Kano, Kaduna and the North West 41-42
• Port Harcourt, Benin and the South-South 42-43
• Aba, Onitsha and the South East 43
• Abuja 43-45
Online retail in Nigeria 46-48

• Profiles of Nigeria’s key retailers 49-50
Interview 51-52
‘Online retail is waxing stronger’
Winning in Nigeria’s retail market 53-55
Facts For Investors 56-57
Abbreviations 58
7
The Nigerian Retail Report 2014/2015 ACRONYMS AND ABBREVIATIONS
8
Overview
Retail in Nigeria was once confined to traditional open markets and small local
storekeepers – loosely referred to as the informal retail sector of the Nigerian
economy – which serviced communities. Between 1960 and the early 1980s, there
were standard retail malls which operated chain stores across the country; their
number reduced because of the harsh business environment and the decline in
business in that era, leaving the country without standard malls for retail business.
This gap led to the growth of the informal or traditional retail market, which
traditionally constitutes a formidable part of the retail structure in Nigeria.
Today, Nigeria is experiencing a tremendous shift to a more sophisticated

structure as formal or organised retail continues to gain ascendency.
The distribution chain and the organisation of outlets continue to reflect
those of a rapidly evolving economy as standards of living improve and
as the population continues to snowball. In the past eight years, Nigeria’s
population has grown from 150 million, as established by the population
census conducted in 2006, to a country with an estimated population of 171
million people by 2013. In the midst of this, the middle class continues to
expand even as 51 percent of the country’s population now lives in cities.
The rise of organised retail has been rapid in Nigeria in the last two decades.
NBS data shows that between 2001 and 2004, the wholesale and retail sector
grew by 10 percent per annum. By 2006, its contribution was 16 percent. In
the first halves of 2011, 2012 and 2013, it contributed 15.58 percent, 17.05
percent and 18.44 percent of GDP respectively.
The old or traditional retail system which is adjudged to account for almost
90 percent of retail activity in Nigeria has continued to decline because of
government’s policy, changes in the composition of Nigeria’s population,
rising income level and increasing sophistication of the Nigerian consumer.
In the last decade, the stable political environment, consistently high oil prices,
and rise in GDP have had positive impact on per capita income, which has in turn
moved more Nigerians into the middle class. Today, more families shop together
and organised facilities which meet their need are attracting more shoppers.
Therefore, the old or traditional structure of retail continues to give way to the new.
More than ever, the Nigerian consumer is interested in a decent shopping

environment, neatly-arranged and labelled commodities and the experience
that goes with buying at an organised outlet.
Opportunities in wholesale and retail stem from the fact that demand has
continued to rise. NBS data shows that based on the structure and level
of development of the economy, the average Nigerian household spends
as much as 80 percent of its income on consumables like food and drinks,
clothing, transportation, shelter, education, electronics and power supply.
The average amount devoted to consumption has played a major role in

elevating Nigeria to the status of a 171 million-populated retail powerhouse
on the African continent.
Nigeria has evolved from being a country with 150 million population with
no real mega retail store in 2006 to one with 171 million people who have
about 20 mega retail stores in less than 10 years. The country has the capacity
to support even more malls across its major cities.
9
The Nigerian economy

nigeria’s economy is one of the most
promising on the African continent.
The World Bank put the country’s GDP Nigeria is considered a lower
at $262.6 billion, the second-largest middle-income economy by
on the African continent, in 2012. But
the rebasing process of the economy the AfDB, which groups Nigeria
which was concluded in early 2014 among African countries with
put the value of the economy at $510
billion, making it the biggest in Africa. GDP per capita of between $786
Rebasing the economy became and $3,115 in 2013
imperative as its structure evolved
over the last three decades.
Nigeria has the highest population Chart 1: GDP per capita (current US$)
on the African continent, estimated
at 170 million in 2013, based on Nigeria Ghana South Africa Egypt, Arab Rep.
a population growth rate of 3.2 4E-11
percent per annum. The country is 4E-11
considered a lower middle-income 3E-11
economy by the AfDB, which groups 3E-11
Nigeria among African countries 2E-11
with GDP per capita of between 2E-11
$786 and $3,115 in 2013. 1E-11
5E-11
Administered as a democracy, 0E-00
2013E
Nigeria has maintained a stable
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
macroeconomic environment since
1999. Between 2008 and 2012, in
the heat of the global recession, Decline in the growth of the oil
the Nigerian economy maintained industry is largely attributed to
stable growth rates. The economy non-passage of the PIB, a piece of
has grown at an average rate of 6.7 legislation which is designed to
percent in the past decade. restructure operations and taxation in
the oil and gas industry. In the non-oil
In the past, growth was fuelled sector, high consumer demand and
primarily by the oil sector but increase in agricultural output are
in the last five years, the non-oil responsible for driving growth.
sector has continued to grow at
unprecedented rates therefore Chart 3: Growth rate of the Nigerian economy
skewing the economy in the
direction of the non-oil sector. Real GDP growth Oil (crude petroleum/natural gas) Non-oil
10
Growth in the oil and gas industry 8
took a sudden dive in the last 6
quarter of 2011 but began to re- 4
emerge in the fourth quarter of 2
2013. However, the contribution of 0 0.3
oil to GDP growth has been below -2 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
its actual capacity in recent times. -4 CB
10
Unemployment situation 54 percent in 2012. So far, sectors

Though economic growth in responsible for most of Nigeria’s
Nigeria has been quite robust, growth have not accommodated
with rates among the highest in the number of unemployed
Africa, unemployment remains individuals in the country. Labour
high in the country. In 2013, NBS is therefore cheap in relative
data showed that unemployment terms, though there is often
rose to 23.9 percent in 2011, from need for extensive training of
21.1 percent in 2010. According personnel to make them fit for
to NPC, youth unemployment was the work place.
Chart 4: GDP, $bn

700
577.22
600 542.572
510
500 NOTE:
GDP figures for 2013,
400 2014 and 2015 are
300 263 based on rebased
GDP figures
200
100
-
2003 2004 2005 2005 2007 2008 2009 2010 2011 2012 2013 2014E 2015E
GDP per capita (current US$)

3,500
3,000
NOTE:
2,500 2014 and 2015
2,000 estimates are based
on revised values of
1,500 Nigeria’s GDP
1,000
500
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E
Perhaps the greatest challenge less competitive than products

facing Nigeria’s economy is the imported into the country. High cost
chronic electricity supply problem of manufacturing has also meant
which all sectors of the economy that profit level for local companies
have to contend with. Incessant are not as high as should be, while
power outages have meant that many have closed shop.
manufacturers have to produce
at extremely high cost. This has For a country like Nigeria
made Nigeria-made products that depends on the external
11
environment for a good number Locally, inflation is driven by factors

of goods consumed, inflation is a including food and energy costs.
major concern. Therefore, Nigeria’s Analysts fear that inflation rates
regulatory bank, the CBN, has have the capacity to rise further in
made inflation targeting a major 2014, considering the fact that it
component of its monetary policy. precedes an election year, but the
CBN has so far been able to rein in
Also, key to its policy is the inflation by maintaining a consistent
management of the exchange rate, policy tab on money supply and
and external reserve. The bank’s foreign exchange flows.
MPC meeting are therefore centered
on agreeing to MPR which will To tackle inflation in the long term,
sustain inflation at acceptable levels. government has adopted a number
For the past three years, MPR, which of measures to reduce Nigeria’s
is the basis for pricing other lending dependence on food import,
rates has stood at 12 percent. also the government has floated
a number of funds to revamp
To this end, the apex bank has industries which are ailing. These
been able to moderate inflation to are measures geared at increasing
acceptable levels in the past three the productive capacity of the
years. Within this period, inflation economy and stemming the tide of
peaked at 13.1 percent in January foreign exchange flight and increase
2012, but has dropped to single in the national food budget. The
digit. It recorded its lowest value yet agricultural policies have played
in November 2013 at 7.8 percent. At recorded some success, albeit, most
the end of January 2014, inflation of the results will be fully felt in the
was 8 percent. long run.
Chart 6: Inflation rates
All items (year on change) Food (Year on change)/1
14
13.1
12
10 9.5 9.3
8 8.6
7.8 8
6
4
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
12
Inflation has not had a very barrel while in 2013, the bench
significantly impact on retail mark of $79 was far below the price
business in the past three years, as of the product for the whole year.
prices have remained moderate in There are projections that oil may
the period. The inflation numbers as well outperform government’s
have meant that consumers have benchmark for 2014 therefore
not had to make arbitrary provisions keeping the government and the
for changes in price. Demand has Nigerian economy afloat.
therefore been very stable. Within
the past three years, the CBN’s goal of Global downside risks for oil were
price moderation has been achieved. heightened in the face of the
discovery of shale technology, but
these have been largely allayed by
Oil and the Nigerian economy forecasts from credible institutions
One of the peculiarities of which do not envisage a decline in
the Nigerian economy is the the price of oil in 2014.
overbearing influence oil has on it.
The economy has remained bullish The United States government’s
because of oil. Oil has remained EIA and the OPEC forecast higher
a driver of the economy since the oil demand for 2014, thereby
1970s. In 2012, oil accounted for increasing the prospects of rise in
90 percent of the country’s foreign price. Both institutions forecast
exchange earnings and 85 percent that given the performance of the
of government revenues. Chinese and the US economies
and the improving fortunes of the
In 2013, the ratio did not change European economies, there were
much. Therefore, steady increases prospects that more oil would be
in the international price of oil consumed since the world of the
stabilized the Nigerian economy recession is over. Crude oil and
even in the face of global recession. natural gas account for 15 percent
As the world outgrows the global of Nigeria’s GDP.
recession, oil continues to attract
enough patronage to keep its price Domestically, the oil sector is
higher than $100/barrel, this will faced with a number of challenges
keep the Nigerian economy afloat including oil theft, vandalism of
since it depends largely on the oil facilities, terrorism and the
bullishness of the commodity. non-passage of the PIB, a bill that
was designed to restructure the
Brent, which constitutes a major oil industry and make it more
component of Nigeria’s oil export, attuned to global standards. Most
has maintained a value above of these challenges are receiving
$90/barrel in the past two years, the attention of government
thereby guaranteeing government which has reduced incidences
expenditure and reserves which of terrorism, kidnapping and
fuel importation of needed vandalism to the barest minimum.
commodities. The price of oil for The economy is not, also being left
the last half decade has exceeded at the mercy of the performance
government’s budget benchmark. of the oil sector. Other equally
In 2014, oil benchmark is $74 per important sectors are being
13
considered to grow the economy. Chart 7: Oil price, production and export
Crude oil price (Bonny light) Domestic production Crude oil export
However, there is concerted $/b m/b
effort on the part of government 140 3
to diversify the economy and 120 2.5
reduce oil’s overbearing influence 100 98.06 2
on the economy. To achieve 80
this, agriculture, a sector that 1.5
60
holds comparative advantage 40 1
for Nigeria, has been given a 20 0.5
major place in the government’s 0 0
transformation agenda.
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
No analysis of the economy is
complete without an analysis of the
agricultural sector, wholesale and
retail, telecommunications, and
manufacturing. Agriculture employs over
60 percent of Nigeria’s workforce and
accounted for 40.19 percent and 42.62
percent of Nigeria’s GDP in December
2011 and September 2012 respectively.
In the 1960s, the sector contributed more
than 63 percent of GDP.
The decline in agriculture has led

government to deliberately target
the sector for reform in recent times.
In this direction, a number of policy
reforms have been adopted to improve
the production of rice, sugar, cassava,
wheat, and cocoa (crops in which
Nigeria has comparative advantage).
The reform has also affected the
production and distribution of
fertilizers in the country. In a bid to
tackle the challenge of agric finance,
there have been direct interventions
by the CBN and the BOI. The goal of
both institutions was to provide direct
financial assistance to farmers.
Also important is the retail end of the

economy. The contribution of retail has
continued to grow for the past one and
half decade. In 2005, wholesale and
retail contributed 15 percent of GDP, as
at the first quarter of 2013 the sector’s
contribution was 23 percent of GDP.
14
Manufacturing in Nigeria
Local manufacturing contributes In 2012, the contribution
less than 5 percent to the Nigerian
economy. Over the years, the
of manufacturing to
contribution of manufacturing GDP was 4.20 percent.
has continued to decline steadily
because of the enormous
As at the third quarter of
challenges manufacturers face 2013, it dropped to
in the country. In 2012, the
contribution of manufacturing to
3.58 percent
GDP was 4.20 percent. As at the
third quarter of 2013, it dropped inability to access funds for business
to 3.58 percent. expansion. Some estimates have it
that between 2000 and 2010, more
To this end, capacity utilization than 850 manufacturing companies
has continued to fluctuate but either shut down or temporarily
has remained consistently below halted production in the country
the 70 percent mark. In January because of the challenges they faced.
2014, figures released by the MAN In the midst of this however, some
showed that capacity utilization for companies are making progress
the preceding year was 49 percent. while succour comes as reforms are
Generally, the challenges that beginning implemented.
have beset Nigeria have made it
inevitable for companies to produce Though there have been several
below capacity. incentives to boost manufacturing,
in terms of government bailout of
Among many other challenges specific industries like textile, the
manufactures in Nigeria are faced manufacturing sector remains a
with lack of basic infrastructure, shadow of itself as manufactured
poor electricity supply, insecurity, goods have constituted the biggest
inconsistent government policies and imports in Nigeria since the 1980s.
Chart 10: Manufacturing capacity utilisation

70%
60%
50%
40%
30%
20%
10%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
15
Social-economic characteristics
of the population As at 2011, life expectancy
Beginning from the 1960s when
the country gained independence, in Nigeria was 52 years
Nigeria’s social indicators have
presented a mixed picture of compared to average life
development. expectancy of 58 years
While life expectancy has across Africa
improved, other indicators – such
as literacy rate, GDP per capita,
and the percentage of the poor in
the society – have not improved
significantly. The challenges vary In Nigeria, adult literacy rate in
across zones in Nigeria as the English language is 57.9 percent
country has not developed evenly compared to 67 percent for the
in the past 50 years. The Northern whole of Africa. Imo and Lagos
part of the country presents states have the highest adult
data which is below the national literacy rates of 80.8 percent and
average across most socio- 80.5 percent, respectively, while
economic indicators. Sokoto has the least literacy rate
of 22.1 percent. The literacy gap
As at 2011, life expectancy in between urban and rural residents
Nigeria was 52 years compared is very large. Literacy rate is 69.4
to average life expectancy of percent in the urban area and
58 years across Africa. In 2003, 38.5 percent in the rural area.
life expectancy was 47.6 years. Household members in the North-
Over the years, there has been west and North-east are four times
consistent improvement in life more likely not to have education
expectancy compared to what than those in the Southern regions.
the figures were in the 1960s, 70s
and 90s. This has also affected the Based on NBS data, about 113
population of the country as more million Nigerians lived in relative
people live longer. poverty, though the indices have
Chart 11: GDP per capita (current US$)
Nigeria South Africa Egypt

1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014E
Source: World Bank
16
continued to improve. The degree 49.8 percent occurrence of poverty.

of poverty varies across the six
zones that make up the country. Malnutrition is highest in the north-
While zones in the South have west and the north-east but lowest
better figures, those in the North in the South-east and the South-
have higher percentages of the south zone. Access to safe drinking
poor. About 69.1 percent of the water ranges from 30 percent in
population of the north-east is the North-east region to about 75
regarded as poor, while 71 percent percent in the South-west. Access
of the population of the north- to basic sanitation ranges from 45
west is regarded as poor. In the percent in the North-east to 70
south-south, 55.5 percent of the percent in the South-east region.
population is poor; in the south- There is a clear divide between the
east, the percentage of the poor is North, which is less developed, and
59.5; while the south-west, has a the South which is more developed.
Chart 12: Per capita income ($, 2012)

8,000 7,508
7,000
6,000
5,000
NOTE:
4,000 Rebased figures on
3,000 the economy showed
that its per capita
2,000 1,605 1,555 1,417 income had risen
943
to $2,688 for 2013
1,000
-
South Africa Ghana Nigeria Sub Sahara Kenya
Africa
Source: World Bank
Chart 13: Life expectancy

95
Nigeria Ghana South Africa Egypt, Arab Rep.
85
75
65
55
45
35
25
70
72
74
76
78
82
80
92
84
86
88
90
94
96
98
00
02
04
06
08
10
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
Source: World Bank
17
Chart 14: Population that is poor (%), 2012
80
71.4 69.1 69
70
59.5
60 55.5
49.8
50
40
30
20
10
0
North West North East South West South South South East National
Source: NBS
Rebasing and the new process gives a more accurate

face of the economy picture of changes which have taken
The rebased figures of the place in the economy between
Nigerian economy which were 1990 and 2014. It also unpacked
released early 2014 revealed a the economy thus giving a clearer
number of interesting changes picture of economic activties which
which have taken place in the were hitherto concealed under
Nigerian economy. While the other sectors. The process pushed
figures it confirmed the rise of Nigeria’s GDP to 26th place in the
retail, telecommunication, real global economy. On per capita
estate and electricity supply, it also income scale, Nigeria’s ranking also
underscored the reduced influence improved globally, moving from
of crude petroleum and gas on the the135 position to 121st, with per
economy. Essentially, the rebasing capita income of $2, 688 in 2013.
Sectoral distribution of GDP (pre and post rebasing)

2010 2010 2011 2011 2012 2012 2013 2013
old new old new old new old new
Agriculture 30.34 24.00 30.99 22.8 33.08 22.4 34.69 21.97
Industry 46.08 25.81 44.29 27.85 40.59 26.72 36.26 25.64
Manufacturing 1.89 6.60 1.86 6.46 1.88 6.67 1.94 6.83
Crude oil and 42.68 15.5 40.86 17.52 37.01 15.89 32.43 14.4
Natural gas
Services 23.58 50.22 23.72 49.35 26.33 50.91 29.04 51.89
Telecommunication 0.77 9.10 0.78 8.74 0.82 8.73 0.86 8.69
and Info services
Motion pictures, - 0.88 - 1.01 - 1.20 - 1.42
sound recording and
music production
18
Chart 15: Percentage growth Norminal GDP, 2013
Electricity, Gas, Steam and Air Supply 44.4

Motion Pictures, Sound Recording and Music 33.5
Financial Institutions 32.3
Arts , Entertainment and Research 27.2
Plastic and Rubber Products 23.8
Coal Mining 20.2
Basic Metal, Iron and Steel 20.1
Metal Ores 17.9
Food, Beverages and Tobacco 17.2
Education 17.1
Water Supply, Sewerage, Waste Management and 17.0
Cement 16.6
Pulp, Paper and Paper Products 16.6
Chemical and Pharmaceutical Products 16.5
Real Estate 1 6.0
Accommondation and Food Services 15.4
Motor Vehicles & Assembly 15.4
Trade 15.3
Inssurnce 15.2
Other Services 14.4
Air Transport 14.4
Professional, Scientific and Technical Services 14.3
Oil Refening 14.1
Publishing 14.1
Livestock 13.8
Fishing 13.7
Human Health and Social Services 13.6
Administrative and Support Services 13.5
Quarrying and Other Minerals 13.5
Wood and Wood Products 13.4
Public Aministration 13.3
Transport Services 13.3
Water Transport 13.3
Electrical and Electronics 12.9
Road Transport 12.7
GDP at Basic Prices 12.4
Telecommunications and Information Services 12.3
Rail Transport and Pipelines 12.0
Forestry 12.0
Crop Production 10.4
Non-Metallic Products 9.7
Post and Courier Services 9.7
Other Manufacturing 8.2
Construction 7.2
Broadcasting 6.4
Textile, Apparel and Footwear 2.6
Crude Petroleum and Natural Gas 2.1
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Source: NBS
19
The new numbers give a better

perspective on the actual size of the
Nigerian economy.
Chart 16: Structure of GDP (%) -rebased series
Manufacturing Services and others Mining construction, etc Agriculture

120
100
24 23 22
34 34 33 32 33 33
80 43 37
49
19 21 20
60
37 39 41 39 38 39 32
40 27 33
50 50 51
20
25 21 21 24 24 26 27 26 29
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: NBS
Chart 17: Final consumption in Nigeria (N’billion)

35.00
30.00 28.76
26.32
25.00 22.85 22.94
20.00 18.98
16.24 16.09
15.00
10.00
5.00
2007 2008 2009 2010 2011 2012E 2013E

Source: NBS
20
Developments in
Africa’s retail market
One of Africa’s major attractions

in recent times is the rise in
consumption on the continent.
The bank further
Once thought to be the laggard, estimates that
the tide has turned significantly in
the last decade as Africa continues
consumption spending
to establish itself as ‘the new retail will be $1.77 trillion
frontier’.
by year-end 2014 and
With a population of over 1.03 $1.78 by 2015
billion (15 percent of global
population), retail spend of almost
$0.9 trillion (N144trn) in 2013, a
$1.8-trillion economy which is the continent’s major economies.
expected to grow by 5.3 percent
in 2014, Africa is becoming a The middle class, which is driving
force to reckon with globally. The most of the growth, is loosely
continent’s population is expected defined by the AfDB as anyone
to hit 2.4 billion by 2025. who spends between $2 and $20
a day (in purchasing-power parity
For the past five years, higher terms).
return on investment from major
African countries has meant that Africa’s middle class has been
more investments flowed into the growing at 3.2 percent per annum
continent, especially during the since 1983. It is estimated that
global financial crisis. This in part more than 34 percent of Africans,
led to rising real income which also 300 million people, can be
led to higher consumer spending described as individuals in the
in the foremost economies in middle class, up from 27 percent
Africa. in 2000. The AfDB classifies the
middle class into three: the lower,
The AfDB projects that consumer middle and upper middle class.
spending in Africa will almost
double in the next decade. The Of the 300 million people who
bank further estimates that make up Africa’s middle class,
consumption spending will be half are referred to as the floating
$1.77 trillion by year-end 2014 and middle class (the lower). These
$1.78 by 2015. are individuals that can revert
into poverty very easily, because
Most of the growth in Africa’s of economic shocks which could
consumption is fuelled by occur to them. There is always a
population growth, rising fortunes floating middle class in Africa.
on the continent (the growth of
the middle class), change in the There is the more stable part of the
structure of its society (as more middle class (which may be loosely
Africans now live in cities), and referred to as the “mid-middle
relative political stability in most of class”). These make up about 30
21
percent of the total middle class. consume more than $20 daily;
They, as well as the upper middle they make up 10 percent of the
class, are those who provide middle class. Currently, the World
robust consumer growth. In the Bank classifies half of Africa’s 54
past five years, more Africans have countries as either middle- or
migrated to the mid-middle class, high-income countries. By 2060,
though the percentage between the number of middle-class
the three groups has changed Africans is expected to hit 1.1
rapidly over the years. billion, with more African living in
cities, which is expected to further
On the top of the pyramid, the expand the wholesale and retail
higher middle class are those who landscape in the country.
Chart 18: The middle class in Africa

(% spending per day at purchasing power parity)
Lower (less than $2) Middle ($2-$20) Upper (more than $20)
6% 8% 12% 10%
22% 20% 18%
30%
72% 72% 70% 60%
1980 1990 2000 2010
22
Chart 19: GDP, current prices, US$, bn, 2013
South Africa 349.4

Nigeria 309.1
Egypt 247.8
NOTE:
Angola 210.7 Nigeria’s rebased
GDP firgure for
Morocco 108.8 2013 stood at $510
Libya 88.7
Sudan 65.9
Tunisia 46.0
Kenya 44.5
Ethiopia 44.0
Ghana 43.3
Cameroon 27.1
0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0
Source: World Bank, IMF
Retail contributed more to most up shops in West Africa, especially

local economies in Africa in 2013. in Ghana and Nigeria, though the
At the beginning of the year, South retail outlets will be fully operational
African retail market got a boost in 2015. Also, South Africa’s Spar
when the world’s largest retailer, Group Limited, in partnership with
Walmart, expanded its international an Angolan company, opened a
business with a 51 percent stake in store in Luanda, Angola’s capital.
South Africa’s retail and wholesale The Fouani Group, which retails
giant, Massmart. The $2.4 billion electronics, also opened new shops
deal gave Walmart access to 50 across Africa, especially in Nigeria.
million new customers, while using
Massmart’s footprint to expand into Apart from these investments,
other African countries. western producers along with their
local (retailers) partners increased
During the year, Imara S.P. Reid their brand offerings and established
Stockbrokers, a Johannesburg- new supply chains across Africa.
based investment bank, announced The Spanish clothing retailer, Zara,
that South Africans, who had entered the Kenyan market through
invested in retail through it, a distribution agreement with
had committed as much as $2.5 local retailer, Deacons. On its own,
million to retail endeavours in sub- Deacons launched its Massimo Dutti
Saharan Africa. Mid-2013 saw the clothing line in Kenya in 2013.
announcement by French retail
giant, Carrefour, that it would set African retailers such as South
23
Africa’s Shoprite, which operates in are some positive indications

more than 16 African countries, and already.
Nakumatt, which is based in Kenya
and has stores in neighbouring Most forecasts are positive about
Uganda, Rwanda, and Tanzania, sustainability of the trend in retail
have done a lot of expansion. growth. The continent’s economic
outlook for the next five years is
In Nigeria, Black & Decker promising. Its GDP is expected
launched over 20 household to grow by 5.3 percent in 2014.
machines; BlackUp Paris, a Sub-Saharan Africa is expected
maker of personal care products, to grow at 6.1 percent in 2014.
launched four beauty products, In 2010, according to the AfDB,
in conjunction with Montaigne poverty level as a percentage of
Place, a Lagos-based retailer; total population was 48.5 percent;
while Maybelline New York, by 2020, it is expected to be 20
also a personal care products percent. The data suggests that
manufacturer, formally introduced in the future more African will be
its products into the country. empowered to consume.
The IT and electronic section

of the retail market received a
barge of new releases from Apple,
Africa’s Shoprite, which operates in
BlackBerry, Samsung, Tecno, more than 16 African countries, and
LG, Nokia and Panasonic. This
amounted to more raw materials
Nakumatt, which is based in Kenya
for local retailers and millions of and has stores in neighbouring
dollars in spending for customers
who could afford new brands. The
Uganda, Rwanda, and Tanzania,
impact of these changes will be have done a lot of expansion
felt more in 2014, though there
24
Profiling Nigeria’s
retail outlets
Though the types of retail outlets
in Nigeria can be classified The traditional open
along the lines of the NAICS
which provides a platform for
market retail outlets
the collection of comparable constitute over 70 percent
statistics across North America, for of the retail structure of
the purpose of this report, retail
outlets are classified differently. the country, the trend is
changing in many cities
This report clasifies Nigerian
retail outlets into four categories,
based on their structure and While the traditional open market
scale of operation. Nigerian retail retail outlets constitute over 70
outlets are classified into: the percent of the retail structure of
traditional open market outlets; the country, the trend is changing
unit neighbourhood stores or in many cities. The traditional
supermarkets; multi-branch system is gradually shrinking
supermarkets/franchises; and mega while other forms of retail are
supermarkets/shopping malls. expanding.
Attributes leading to switch from traditional to formal retail in Nigeria
Close to home 2
Convenient to get to 1 ,8
Food and Groceries are good value 1 ,7
Clean and hygienic 1 ,6
Efficient checkout counters 1 ,6
Wide product range and variety 1 ,6
Good range of fresh products 1 ,5
High quality fresh food 1 ,5
Staff provide good service 1 ,3
Everything I need in one store 1 ,3
Low prices for most items 1 ,3
Better selection of high quality brands 1 ,2
Good quality instant cooked foods 1 ,2
Easy to find what I need 1 ,05
Modern and comfortable store 0 ,09
Attractive and interesting promotions 0 ,09
Source: Euronmonitor (Nigeria Lifestyles 2010), Accenture (2012)
25
A number of factors are environment present the platform

responsible for this. that accommodates that culture.
Firstly, the population is Nigeria’s emerging middle class is

growing and becoming more confident and comfortable with
sophisticated; secondly, trying new products; also, they
government’s policy on some are interested in breaking with
aspects of traditional open the traditional retail system where
market retail (especially possible. The traditional, informal
street trading) is making the retail infrastructure is often
environment less conducive for viewed as unprofessional and
such retailers (Government’s operating from places that are not
objective, especially in Nigeria’s in tune with the best of advanced
first-tier cities, is to make retail societies. In light of this, the past
more organised and taxable). decade has seen an increase in the
Also, more families shop number of all other types of retail
together and the organised retail outlets across the country.
Retail outlet census, Nigeria

2005 2010 % growth (2005-2010)
Total 606,505 829,860 36
Urban 452,657 551,557 22
Rural 153,848 181,127 18
Source: AC Nielsen Nigeria
The number of retailers registered The number of outlets as at year

with Nigeria’s major business end 2013 is expected to have
search engine, v-connect.com, has increased far more than what it
increased rapidly over the past was in 2010 because the industry
five years, reflecting the increase has grown significantly within
in formal retail. Total number of this period. New sophisticated
retailers registered on the network multiple branch supermarket/
as at March 2014 was 3,170, with franchises have sprung up across
concentration in large cities. the country and megastores
Surveys by AC Nielsen which has and supermarkets which were
extensive presence in Nigeria shows hitherto located in just one place
that between 2005 and 2010, the have expanded to take into
number of retail outlets across the account the development of new
country increased by 36 percent. suburbs and city centeres.
26
Distribution of retailers accross V-connect data base
42%
22%
8% 8%
6% 6%
3% 3% 2% 2%
Lagos Others Oyo Rivers Abuja Ogun Cross River Ondo Kano Delta
Source: Vconnect
27
28
Classifying Nigeria
retail outlets
The traditional open market retail outlets
The traditional It is estimated that This has led Most Nigerians
retail market is the transactions worth governments across still patronise these
most common in more than N1 billion the country to outlets because
Nigeria. This system are carried out by continue to impose of their proximity
of trade comprises these retailers daily. trade restrictions to homes, the
roadside retailers Where they are on them. However, personal shopping
and those who not well regulated, they still make up a experience they offer,
operate from stalls traditional open remarkable part and the cost of the
in the open markets. market retailers of the retail commodities they
Essentially, this do not pay taxes, industry. offer consumers.
retailer class includes and may deface Prices are often
all transactions that the environment negotiable in this
occur on stalled traffic where city plans do class of outlets. Other
and on congested not support their than this, they hardly
street corners. existence in the offer the alluring
particular areas where shopping experience
they conduct their which more
businesses. sophisticated
outlets offer.
Unit neighbourhood stores/supermarkets

Unit neighbourhood Often, these Unit neighbourhood
stores or commodities stores/supermarkets
supermarkets in are stocked and have been known to
Nigeria are those dispensed to grow into multiple
stores that do not customers who live branch supermarkets/
have more than within the vicinity franchises. Often, the
one branch. They of the stores. Before entrepreneur begins
are located within the re-emergence with one outlet
neighbourhoods they of multiple branch and spreads as the
serve and bear an supermarkets, these business becomes
assortment of items stores served as the more profitable. Many
which are needed alternative to the major franchises
by households. They traditional open have developed from
are often owned by market outlets. Unit neighbourhood
single individuals and stores/supermarkets.
operated by family
members and a few
employees.
29
Multiple branch supermarket/franchises (convenience stores)

Multiple branch The distinguishing In some cases, these
supermarkets/ factor between Unit outlets offer unique
franchises in neighbourhood customer experiences
Nigeria are small stores/supermarkets and services which
or medium-sized and multiple branch mega malls offer. In
retail outlets which supermarket/ other cases, too, they
offer assortments franchises is that in are organised like
of products and are the case of the later, departmental stores.
scattered across the same shop is
major cities. replicated in several
locations. Good
examples of this type
of outlets include Best
Choice and Addide
which have major
presence in Lagos.
Mega supermarkets/shopping malls

Mega supermarket/ Often, they are
shopping malls are patronised by
large multi-product the middle class.
offering retail outlets The resurgence of
in the mould of sophisticated retail
Shoprite, Grocery outlets in Nigeria can
Bazaar and SPAR. be credited to this
Their selling point set of retailers. There
include the unique are still less than
customer experience 20 of this type of
they offer, quality outlets spread across
products, and in some Nigeria.
cases low prices.
In the 1960s and 1970s, there were in the hands of the traditional
several organised retail outlets retail structures.
in Lagos, Kaduna, Port Harcourt
and Kano. In that era, large The disappearance of the middle
multinational retail outlet chains class has been attributed to drastic
like Leventis, UTC, Lennards, Bata, decline in the manufacturing sector
Chellarams and Kingsway were of which was a major employer of
present across Nigeria, but by the labour in the period before 1980.
early 1990s, because the middle The textile industry, and other
class had virtually disappeared, light production plants in the
the number of organised retail country, served as structures which
stores reduced, leaving the market accounted for large number of
30
employments across the country. now has seven outlets in the

But the turn of the millennium country. Among the foreign
saw a change of events, as big retail investors, it has perhaps
foreign retail investors began to the most-aggressive expansion
re-emerge across Nigeria. Apart plan. It already has three malls
from the large international in Lagos, and one each in Kwara,
investors, many local businessmen Kano, Oyo and Abuja. By year-end
have taken up the challenge to 2014, it plans to have one more
modernise retail. outlet in each of Abuja, Anambra,
Delta, Enugu and Oyo. Ultimately,
Currently, foreign retail investors Shoprite plans to have 50 stores
have some of the biggest stand- spread across Nigeria in the near
alone retail investments in the future. Shoprite plans to bring
country. the number of its outlets to 14 by
year-end 2014.
The biggest are South African
Shoprite, and Spar (a Dutch chain The success of the foreign outlets
run in Nigeria by the Artee Group). has led to the proliferation of
Spar also owns the Park ‘n’ Shop foreign and local mega outlets
outlets, which has six departments and retail distribution stores. What
(three of the outlets are in Lagos; more can you say? What more
two are in Abuja, while one is will you like to know about the
currently in operation in Port composition of their sales and
Harcourt). A new outlet is to be their operations? What are the
opened in Port Harcourt before further opportunities which these
the end of 2014. companies are not seeing?
In the electronics section of the

retail market, Cash ‘N’ Carry is Few players dominate the multiple
a major player. It is one of the branch supermarket/franchises
major electronics and household (convenience stores). Addide and
appliances retailers in Nigeria. Best Choice are some of the most
Cash ‘N’ Carry currently operates common in Lagos. While Best
eight stores nationwide which Choice has 260 stores in operation,
offers technologically advanced Addide has 23 with ambition to
electronics brands at affordable increase this number to 20 in the
rates. The combination of the next three years. The multiple-
company’s passion for retail with its branched mini super marts/
sensitive price model has endeared convenience stores have a common
it to many Nigerians. All products characteristic.
are sourced directly from the
manufacturers. In the near future, They are often owned by one
Cash ‘N’ Carry plans to extend its investor or a group of investors and
operations to Apapa, Festac, Lekki, open new branches as the business
Ajah, Abuja, Port Harcourt, Kano, records higher profit. Examples
Owerri, and Delta State. include The Everyday Group and
Grocery Bazaar which operate
Shoprite, which opened its first from Port Harcourt and Lagos
mega store in December 2005, respectively.
31
The Grocery Bazaar Model

The fist, of the two existing the best of wet-markets (better
Grocery Bazaar (“gb”) outlets pricing, local knowledge, product
was established strategically at a & taste) to offer a balanced
location which is underserved by affordable and convenient
standard retail outlets, yet densely shopping experience to the
populated. This strategy has been ordinary Nigerian.
largely successful in the last five
years. The company has a unique
understanding of no-frills
According to the Founder/Chief discounting and a clear vision
Executive Officer of the business, of the grocery retail industry in
Mr. Samuel Ejeh, “one of the major Nigeria which it is leveraging on to
restrains to our expansion has not provide consumers with a unique
been profitability, but restriction shopping experience.
imposed by the structure of
mortgage in Nigeria.” gb’s ultimate Mr. Ejeh points out that the
vision is to become a chain of large advantage which larger retail
scale retail outlets which have a outlets have over small unit
single management. Herein lies stores scattered across a
the uniqueness of gb. large geographical area is the
opportunity costs associated
Grocery Bazaar is a select with space, and the cost of doing
assortment mass grocery retailer business.
that was established to address
the grocery shopping concerns gb is of the view that a hybrid
of the ordinary Nigerian, and to model that combines supermarket
take advantage of the emerging convenience (systems, structures
grocery retail opportunity in the etc.) with wet-market selling
country. (discounted pricing, assortment,
etc.) –the “super-wet market”
The company is a hybrid of both model is better suited to the
the “wet” and “super” markets, majority of Nigerians.
as it combines the convenience
of supermarkets with the This hybrid of supermarket
affordability of wet-markets to and wet-market combines the
form what it calls a “super-wet benefits (price and convenience)
market”. of both retail models. The practice
in Nigeria is to have either
This retail concept combines the better pricing (wet-market) or
best of supermarkets (structure, convenience (supermarket), but
convenience, systems) with not both. gb’s hybrid combines
32
both to creates a balance suitable ordinary Nigerians.

to the ordinary Nigerian.
Conventional supermarkets are
Even though ‘supermarkets’ and ‘wet too expensive for most ordinary
markets’ would account for the bulk Nigerians because of the cost
of how Nigerians in urban centers associated with the level of
shop for groceries in the near future, convenience they offer, while
conventional supermarket and traditional wet-markets offer
traditional wet-market models do cheaper prices but with almost no
not quite meet the needs of most convenience whatsoever.
The Best Choice model

Best Choice shops are retail outlets pricing, products, infrastructure
within neighbourhoods. They offer and most importantly customer
high quality FMCG products at satisfaction.
competitive prices.
The company has been able to
Best Choice was set because of the position its outlets as the favourite
desire of its managers to organise convenient store by providing
the current, largely unorganised the best in category products in
retail sector in Nigeria. The the neigbourhood at best prices.
business is run on a franchise Hence, ensuring that people are
concept whereby the Business not required to travel to super
Associate (Franchisee) invests markets to get quality products.
money and enters into a contract
with the company (Best Choice). Currently, with over 260 outlets
and more than 350 Stock keeping
Post the contractual agreement, unit, Best Choice has already made
Best Choice rents, furnishes and a strong presence felt in Lagos.
brands the outlets. Also, all the The company is in the process of
products are made available to mapping more areas to cover the
these outlets by Best Choice. The length and breadth of Lagos and
company ensures that all the the rest of Nigeria as a whole in
Business Associates maintain the order to help Nigerians reap the
outlets as per the high standards benefits which the Best Choice
set by Best Choice, in terms of brand offers.
33
Nigeria’s retail power houses

Nigeria’s 170 million inhabitants
are not scattered evenly across There are nine cities in Nigeria
the country. The country has a
landmass of 923,768 km² with a that have population figures in
population density of 185/km².
For instance, Lagos state has
excess of one million
a population density of 4,193/
km² while Taraba state has a
population density of 40.73/ km². After 2010, Nigeria became more urban than rural
Given this spread, retail business 200
owners have to pitch their 162
160
outlets in the most advantageous Urban Population
places. Some locations are Population (in millions) 120 Rural Population
more favourable for large retail 81
80
businesses while others can at
best sustain small outlets. 40
0
Basically, Nigeria’s cities can be 1950 1960 1970 1980 1990 2000 2010 2020 2030
categorized into two types: the
First tier cities and the Second
tier cities. The First tier cities have
the highest population densities, There are nine cities in Nigeria that
the most sophisticated consumer have population figures in excess
classes; they also have the best of one million; these are mostly
infrastructure and the highest First tier cities, the largest of which
concentration of middle class are Lagos, Kano, Ibadan, Kaduna
individuals. and Port Harcourt. Lagos city has
a population of over 10 million
On the other hand, the Second people, Kano city has a population
tier cities also have high of 4.1 million people, Ibadan has
population figures. They do population of 3.8 million while
not however have as many Port Harcourt has a population of
individuals in the middle class 1.8 million.
as the First tier cities. But the
second tier cities also make Benin City has a population of
up a large market for potential 1.3 million while Aba has the
investors and indeed since much least population among the nine
of Nigeria is becoming urbanized, most populated cities in Nigeria.
a lot of Second tier cities are fast Other prominent cities in Nigeria
changing in status. Apart from the include Onitsha, Warri, Asaba,
two types of cities, Nigeria has Jos, Niger, Oshogbo, Akure,
many towns and villages which Enugu town, and Abeokuta.
cannot be directly classified as The population figures of most
cities, a lot of retail activity takes Nigeria’s first tier cities dwarf
place in these towns; small retail those of South Africa’s most
outlets are best for these places. populated cities.
34
The most attractive locations for scale and structure of outlet can
new big retail outlets are often however be decided by the investor
the first tier cities of Lagos, Port after further analysis, but most small
Harcourt, Ibadan and Abuja, due to Nigerian towns can sustain any
the sophistication of the population, form of organized small retail outlet,
population density, ease of access while the bigger outlets seem to
to retail outlets, and superior thrive better where density and
infrastructure. The decision on the purchasing power are high.
35
Ten most populated cities in Nigeria (mn)

2013 2020
Lagos 10.1
12.6
Kano 4.1
5.1
Ibadan 3.9
4.8
1.8
Kaduna
2.3
Port Harcourt 1.3

1.6
1.3
Benin City
1.6
Maiduguri 1.2
1.5
Zaria 1.1
1.4
Aba 1.0
1.2
0.9
Ilorin
1.2
Source: NPC, BRIU
But more than population figures, both the general economy and the
Nigeria has the advantage of the retail sector in particular.
concentration of youths in its
population. According to the UNFPA, In recent years, the youth market
one third of Nigeria’s population, has been in the forefront of
57 million, are young people consumption of new phones,
between the ages of 10 to 24 years, electronics, fashion related materials,
another survey by the NBS puts the processed food, and educational
population of youths (15 – 35 years) material. As income levels continue
in the country at 64 million with to rise and as purchasing power
females accounting for 51.6 percent. continues to increase, it is expected
But the definition of youth in Nigeria that the youths will maintain their
exceeds this bracket, as the country position as a major consumption
defines youths as those between the power house in the country.
18-35 years age bracket. However, unemployment remains
a major challenge to fulfilling their
In the period between 1991 and consumption potential.
2006, the youth population grew
from 22.5 million to well over 30 In terms of demographic location, youth
million, according to the NBS. In are concentrated in the urban centers
absolute terms, there are more as work is aslo more readily available in
young people in Nigeria today than those areas, the quality of life in urban
any other segment of the population; areas is often more sophisticated hence
this comes with its peculiarities for the attraction for youths to the cities.
36
37
38
0
2
4
6
8
10
12
14
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Kano
Lagos
Lagos Kaduna
Anambra Katsina
Source: UNFPA
Imo Oyo
Akwa Ibom Rivers
47%
15-29
Abia
Bauchi
Rivers
Kano Jigawa
Borno
Ebonyi
Benue
Ekiti
Osun Delta
Niger Anambra
Enugu Niger
Ondo Akwa Ibom
53%
20-24
Delta Imo
Ogun Ogun
Male
Katsina Sokoto
Oyo Osun
Jigawa Ondo
Abuja FCT Zamfara
Edo Kogi
Bayelsa Kebbi
Female
Sokoto Enugu
56%
25-29
State population (mn), 2013
Kaduna Population density, 2013 Edo

Cross River Adamawa
Gombe Plateau
Benue
Age composition of Nigerian youths, 2006

Cross River
Kogi Abia
Adamawa Ekiti
Zamfara Yobe
Kebbi Gombe
Nauchi
52%
Kwara
30-35
Nasarawa Taraba
Kwara Abuja FCT
Borno Ebonyi
Plateau
Nassarawa
Yobe
Bayelsa
Taraba
By year end 2015, the market of Jabi Lake.

in organized retail real-estate
anticipates about 200,000 square Also at Abuja, is an audacious
metres of space. In Lagos the plan by the Churchgate Group to
Persianas Group is expanding the construct the N156 billion World
Palms shopping mall. This will Trade Centre projects, which will
berth about 40,000 square metres include the 40,000 square metres
of additional retail space and is Capital City Mall, which will be
due for delivery by 2015/2016. a destination offering the finest
Also, South African owned, Novare collection of luxury brands and
Private Partners and RMB Westport international boutiques, as well
are bound to offer retailers more as global dining choices and VIP
options when they both deliver cinemas.
their 22,000 square metres Lekki
Mall and 14,000 square metres Resilient Africa, a property
Osapa Convenience Centre development and investment
respectively, by year end 2015. company will by the end of 2014
have spiced retail experience in
UACN Property Development southern Nigeria by providing over
Company, (UPDC), is also poised 53,280 square metres of retail space
to complete its 10,000 square across four major cities through
metres Festival Mall by the its ongoing; 13,800 square metres
fourth quarter of 2014. But other Delta mall, 13,300 square metres
Nigerian cities are also in focus, Benin city mall, 13,300 sqm Owerri
in Abuja, a partnership between mall and the Asaba Mall, which
Actis and Duval Properties, an boasts of the same retail space.
indigenous real estate investment Also in the same geographical
and development firm is nearing location, the Anambra state
completion of the 27,000 square government and African Capital
metres Jabi Lake Mall, to be Alliance would have delivered the
delivered by late 2015 in a unique 15,000 square metres Onitsha Mall
waterside location on the shores by year end 2015.
39
Nigeria’s major
retail markets
Festac, Ejigbo, Satellite town, Kirikiri, Navy

towns and the Apapa, Ajenjule axis, these
large markets have been largely ignored by
major retailers
Nigeria throws up a number of a lot of important indices. Lagos has

investment opportunities for the most shopping malls and the
retail business, the opportunities most organized retail structure in
become even more obvious when Nigeria.
the population is analyzed from the
point of view of individual cities. The To this end, it accounts for a large
biggest cities for retail in Nigeria percentage of Nigeria’s retail spend.
are Lagos, Port Harcourt, Ibadan, There are over 10 large shopping
Kaduna, Warri, Kano, Abuja, Benin malls, of international standard in
City, Aba, Zaria, Onitsha, Enugu Lagos with major ones including,
and Onitsha. Each has a sprawling The Palms Shopping Mall, Adeniran
population and the required Ogunsanya Shopping Centre, Ikeja
composition of individuals that City Mall, Cocoa Mall Park Lane and
shop in modern retail outlets, but the City Mall among others. Lagos is
often specific locations which are home to the operations of Shoprite,
best for retail must be identified Park n Shop, Grocery Bazaar, Addide,
by investors, so as to get the Best Choice among other major
best advantage. In the past half a retailers.
decade, more retail investment has
flowed into these cities in form of Major retail mega outlets in Lagos
establishment of new retail outlets are located in Ikeja, Lekki, Marina
and the improvement/expansion of and Surulere which cater for the
existing ones. upper class. They are located in
parts of the city that have superior
infrastructure and are designed
Lagos, Ibadan and the South West to serve residences within their
For the past 10 years, Lagos, which vicinities and beyond but there are
is Nigeria’s most populated city and opportunities for mega stores in
its commercial capital, has grown sprawling location within Lagos,
to become a megacity. It has the like Festac, Ejigbo, Satellite town,
most densely populated surface Kirikiri, Navy towns and the Apapa,
in Nigeria and the most diverse Ajenjule axis, these large markets
composition of individuals from have been largely ignored by major
across Nigeria live in Lagos. The retailers. Apart from this, there
condition of Lagos does not in most are opportunities for small scale
cases reflect the rest of Nigeria, as chain stores across the state. The
the state is ahead of other states on population of Lagos city will be
40
12.6 million by 2020. trader between traders from North

Africa and those from the coast. The
Lagos is just one of the major highly city is perhaps best known for the
populated cities in the South-West; groundnut pyramids which dotted
others are Ibadan, Oyo, Abeokuta its landscape in the late 1960s.
and Oshobgo. Ibadan is the second
most populated city in the South- Though both Kano and Kaduna
West. We estimate that it has a have population numbers that can
population of about 3.9 million sustain any form of retail business,
people. It is the capital of Oyo State, none of them has the same number
and until the late 1970s was reputed of sophisticated malls as Lagos.
to be the largest city in Sub-Sahara The major encumbrances to retail
Africa. At Nigeria’s independence, development in both states in
in 1960, Ibadan was the largest and recent times have remained the low
most populous city in the country purchasing power of the people,
and the third in Africa after Cairo and the apprehension over security
and Johannesburg. problems which have characterized
the north for almost half a decade. But
Ibadan which was the centre of recently, Shoprite opened its Bayero
administration of the old Western Mall in Kano signaling that business in
Region of Nigeria, is home to mostly the area is still worth the risk.
individuals of Yoruba extraction,
though there are quite a number Geographically, Kano urban area
of Nigerians from other parts of covers 137 sq. km. and comprises
the country and indeed Africa who six local government areas: Kano
make their homes in Ibadan. Municipal, Fagge, Dala, Gwale,
Tarauni and Nassarawa- with a
There are several outlets in the population of almost 5 million. Most
city but there are opportunities for of it is underserved and remain
expansion of organised retail in the fertile for retail investment.
city. Recently, Shoprite unveiled an
outlet in the city. It has the intention On the other hand, Kaduna
to opening another one soon. Major is home to about 1.8 million
areas which have dense population,
yet are underserved include
Oluwole, Bodija, Gate, Ojaba/ Geographically, Kano
Akpata and Challenge/ Ojo.
urban area covers 137
sq. km. and comprises
Kano, Kaduna and the North West
In the Northern part of the country, six local government
Kano and Kaduna hold a very areas: Kano Municipal,
remarkable place for retail. In
particular, Kano City is the second Fagge, Dala, Gwale,
most populous in Nigeria, with Tarauni and Nassarawa-
an estimated population of 4.1
million people. For centuries, Kano with a population of
was a center for trade in Northern almost 5 million
Nigeria. It was the melting pot of
41
people. It is perhaps the closest

to what obtains in the south with
respect to the composition of
We estimate that the
its population; Kaduna presents population of Port
a fine mix of all ethnic groups
in Nigeria all cohabiting in a
Harcourt will hit 1.6
northern state. But it does not million by 2020
have the same number of people
or the purchasing power which
those in Lagos do. Important cities Harcourt. Inspector-Gee Wholesale
in to Kaduna State are Zaria and And Retail Stores, Prince Nomay,
Kafanchan. Wine And Spirit Affarz, Chuks
Investment Company Nigeria, Mc
Port Harcourt, Benin Keso Integrated Services are the
and the South-South most prominent. Most of these
The biggest city in the South- outlets have expansion plans within
South is Port Harcourt; though the metropolis.
there are other important cities
like Warri, Asaba and Benin which As the population continues to
equally command a respectable grow and several hitherto remote
amount of retail activity. Port areas open up, new suburbs like
Harcourt has a population 1.3 the Greater Port Harcourt City and
million people, its population other more developed areas like
is as sophisticated as that of Rumuogba, Elelenwo, Rumuokoro,
Lagos with perhaps even higher Rukpokwu, Borokiri Town, still offer
purchasing power per individual. interesting opportunities for big
We estimate that the population of retail investors.
Port Harcourt will hit 1.6 million by
2020. Rivers is located is home to Equally important in the South-
some of Nigeria’s major refineries South is the City of Benin. It
and host a number of important currently has a population of
oil companies. It also has a 1.3 million people and is one of
thriving small-scale manufacturing the oldest cities in Nigeria. Its
industry. population is expected to hit 1.6
million by 2020. New settlements
This has contributed to the are springing up in Ikpoba
sophistication of the city; major Hill, Sapele Road, The GRA and
retailers in Nigeria have rated Port Ekosodin. Though the purchasing
Harcourt next to Lagos in terms of power of people in the city may
retail activity, purchasing power not be as high as that of Port
and infrastructural development. It Harcourt, it still holds opportunity
has also enjoyed an atmosphere of for retail investors who are
peace and prosperity as oil prices interested in expanding their
and the volume of oil produced has businesses.
continued to rise.
There are other important places
There are already a number of like Akwa-Ibom city, Warri, Asaba,
booming retail outlets in Port and Calabar which should draw
42
the attention of retail investors. Abuja

Most of these cities are oil Abuja’s population almost hit the
producing and have seen massive 1 million mark in 2013. The city is
investment in various classes of the capital of Nigeria. A lot of retail
infrastructure in the past 10 years. activity in Abuja is formal albeit,
They have also proved to be major informal retail still makes up a
investment destinations. The reasonable part of retail business in
governments in these areas give the city.
investors incentives for investing.
Abuja has witnessed a huge influx
of people which has led to the
Aba, Onitsha and the South East emergence of satellite towns
Onitsha and Aba are the most such as Karu Urban Area, Suleja,
populated cities in the South Gwagwalada, Lugbe, Kuje and
Eastern part of Nigeria. By year smaller settlements. The masses of
end 2013, Aba’s population was individuals in these satellite towns
estimated at 1 million while that make up the major retail market in
of Onitsha was a little short of 1 Abuja.
million. Aba is the manufacturing
hub of the South-East with most Though most of the mega retail
of the light manufacturing in the outlets are in the center of
zone taking place there; on the Abuja itself, there are immense
other hand Onitsha is home to opportunities for retailer who can
most of the commerce in the zone. take advantage of establishing
major concerns in the satellite
Onitsha is home to the famous towns. Some estimates put the
Onitsha market which is famed population of Abuja at as high
as the biggest open market in as 3 million people. Abuja is
West Africa. There are investment sometimes given the status of a
opportunities for big retailers state rather than a city.
especially in the capital cities of
both Anambra and Abia, where
Onitsha and Aba are located.
Abuja has witnessed a
Other prominent cities in the
South-East include Enugu. (which
huge influx of people
was once a source of coal for which has led to the
Nigeria), Awka, Nnewi, Owerri
and Abakaliki, where the famous
emergence of satellite
Abakaliki rice is grown. The South towns such as Karu
East is known for its dynamism
and the proliferation of small
Urban Area, Suleja,
businesses. Onitsha was projected Gwagwalada, Lugbe,
by the World Bank as the fastest
growing urban center in Nigeria in
Kuje and smaller
2010; it is home to SabMiller, one settlements
of the most successful brewers in
the country.
43
The size of Nigeria’s market inevitably makes it a

consumption powerhouse. Demand has risen across
several product lines including electronics, food and
mobile phones. The figures below show the number
of some products purchased across Nigeria in 2013.
Smart mobile phones sales across Nigeria 2013
30,000,000
25,560,306
25,000,000
20,000,000
15,000,000
10,518,090
10,000,000 7,947,019 7,095,197
5,000,000
-
Lagos North Nigeria South Nigeria Grand Total
Audio home systems sales across Nigeria 2013

400,000
363,928
350,000
300,000
250,000
200,000
161,151
150,000 123,924
100,000 78,853
50,000
-
Source: JFK
44
Flat pannel TVs sales across Nigeria 2013

900,000 853,124
800,000
700,000
600,000
500,000
399,778
400,000
282,050
300,000
200,000 171,296
100,000
-
Source: JFK
Most populated cities in Nigeria 2003 (million)

Lagos 10.1
Kano 4.1
Ibadan 3.9
Kaduna 1.8
Port Harcourt 1.3
Benin City 1.3
Maiduguri 1.2
Zaria 1.1
Aba 1.0
Ilorin 0.9
Jos 0.9
Ogbomosho 0.9
Oyo 0.8
Enugu 0.7
Abeokuta 0.7
Onitsha 0.6
Warri 0.6
Sokoto 0.6
Okene 0.6
Calabar 0.5
Osogbo 0.5
- 2.0 4.0 6.0 8.0 10.0 12.0
45
Online retail in Nigeria
Nigeria has a fast-growing number of the

two classes of people which traditionally
drive internet usage and online retail:
youths and the middle class
Online retail was localized in class and the convenience it offers.

Nigeria less than 10 years ago. Analysts believe that because
Before then, most Nigerians who Nigeria remains one of the largest
had to purchase things that were internet markets in the world for
not available on local shelves had the foreseeable future, online
to resort to foreign platforms like retail can only grow. The country
e-bay and Amazon or wait till they has a fast-growing number of
travelled aboard. Not that Nigeria’s the two classes of people which
online retailers have suddenly traditionally drive internet usage
made everything available, but and online retail: youths and the
they have helped replicate some middle class.
of the luxuries which foreign
online retailers offer locals. With internet penetration,
according to the World Bank, at
By early 2014, the number of 32%, by December 2012, Nigeria
online retailers in the country is the biggest internet market
stood at roughly, 60, with some in Africa (Though the level of
significantly, bigger than others. internet penetration may really
The market has continued to be much higher, considering the
attract new entrants and venture number of Nigerians who use
capitalists who have invested their phones to access data on
massively in most of the online the internet). Of the Nigeria’s 115
startups. Over the past few years, million mobile phone subscribers,
the number of individuals who according to data made available
made purchases online continues by the NCC, 64 million use their
to increase. The bulk of purchases phones to access internet services
revolve around light electronics, regularly. Between 2000 and 2012,
luxury goods, groceries, clothing, internet penetration grew from
phones, books, food items and a paltry 0.06% to 32%, and there
other small commodities. are indications that this trend will
continue in the foreseeable future.
Like most sophisticated retail
activities, e-retail or online retail The major factors fueling the
took root in Nigeria because growth of online retail in Nigeria
of expansion in the use of the include the growth of the middle
internet, rise of the urban middle class, improved internet literacy,
46
better guarantee of transactions met the needs of most locals.

online, enhanced internet But as time progressed, the
banking capacity of local banks, assortment of products improved
convenience and the creativity of with retailers even focusing on
online retailers. specific commodities. Among
Less than a decade ago, Nigeria’s the most popular are Jumia,
few online retailers did not Konga, DealDay, and Taafoo, e.tc.
fully meet the needs of the According to Ventures Africa as
population in terms of the at late 2013, Nigeria’s internet
assortment of what they offered business industry was worth $250
and the kind of strategy that million.
Source: NCC
47
A number of factors have helped to buoy the online retail

encumbered e-commerce in market, for instance, Shopaholic
Nigeria, key among which are Nigeria prides itself as the first
poor internet services, crisis of online clothing store to introduce
trust in online transactions, poor the Cash On Delivery payment
infrastructure especially road system.
networks and electricity.
Jumia became the first retailer to
This has made the cost of offer Next Day delivery service.
transaction extremely high. In the Nigeria’s online retailers have
midst of this, margins are relatively also adopted strategies like pay
low since e-retailers have to wage with cash or card at delivery, free
a price war to outwit each other delivery in Lagos for items above
and the store next door, which N10, 000, etc to move the market.
most customers would rather do But it is clear that online retail is still
business with. Therefore methods at a nascent stage of development
like payment on delivery have in Nigeria albeit, it is set to grow.
Major online retailers in Nigeria

S/N Outlet name Established Specialty
1 Jumia Nigeria 2002 General merchandise
2 Konga 2002 General merchandise
3 Kaymu Nigeria General merchandise
4 Taafoo 2009 Fashion and gadgets
5 Shopaholic Nigeria 2009 Clothing and perfumes
6 Dealdey 2011 General merchandise
7 MyStore Clothing accessories
8 Kara 2012 General merchandise
9 Adibba 2013 General merchandise
10 Gloo.ng 2012 General merchandise
11 mycomputervillage.com Computers and accessories
12 HelloFood 2012 Food vendor
48
Profiles of Nigeria’s key retailers

JUMIA KONGA
In Nigeria, what Online Shopping
is today referred is a pioneering
to as Jumia.com ecommerce company
began as Kasuwa. in Sub Saharan Africa
com. The change was founded in June 2012 by
the outcome of an overwhelming serial entrepreneur, SimShagaya. Konga
response to the online shop’s operates as a ﬁrst party retailer as well
offerings. According to some analyst, as a marketplace for over 150third party
within 6 weeks of its launch, there retailers, providing a catalog of over
were over 1.8million visits. 150,000 products across 12 categories.
With its exceptionally low prices Kongahas grown to be one of the top
and discounts, exclusive products brands in Nigeria in record time. In March
and legendary flash sales, it 2013, Naspers acquired a 50 percent
continues to grow. It recorded some stake in Konga. Konga received funds
firsts, including being the first retailer from Investment AB Kinnevik, a Swedish
to offer the Samsung Galaxy S3 investment company and over $15
phone online. Jumia’s inception was million from investors including Naspers
due to the vision of two outstanding and Kinnivik. In October 2013, Konga
entrepreneurs, Tunde Kehinde and announced that it was moving into a
Raphael Afaedor. new 120,000 sq ft fulfillment centre.
At JUMIA.com, Nigerians can Demand for the company’s
expect the latest mobile phones, services has grown astronomically
laptops, electronics and home since inception. On the 29th of
appliances. Additionally, there November, 2013, Konga.com crashed
are over 20,000 book titles and an and remained offline for 45 minutes
extensive catalogue of beauty, hair, because of the pressure of demand.
baby and children’s products. The site experienced unprecedented
In 2012, Jeremy Hodara and high traffic as a result of its ‘Fall Yakata’
SachaPoignonnec founded and promotions. Sales on that day were
launchedAIH, an African e-commerce the same as the total amount of sales
startup with an aim to grow online made in the whole of December 2012.
businesses around Africa. Jumia is However, Kongahas increased its server
part of the AIH group and the Aim for capacity to prevent downtimes in the
Jumia is to mimic Amazon’s success by future. In December 2013, Human IPO
delivering a wide range of items, from selected Konga as one of the African.
toys to generators across Africa. Shortly
after the startup of the business, JUMIA MYSTORE
launched in five growing countries, MyStore.com.ng offers
which include: Nigeria, Egypt, a wide assortment
Morocco, Kenya and Cote d’Ivoire. of products across
In 2013, the business was growing at categories like Mobiles,
a substantial rate in Nigeria and needed Electronics, Fashion
to expand to contribute in the domestic accessories, Apparel and Footwear, Kids,
market, Jumia Nigeria opened the first Home and Kitchen, Sports, furniture,
ecommerce campus in West Africa auto-parts, Books, Entertainment
by moving to a 90,000 square foot amongst others. With millions registered
warehouse located in Lagos. users, it attracts thousands of internet
JUMIA Finished a great year in 2013 users across the country monthly.
by becoming the first African brand The site prides itself as a vendor which
to win the World Retail award in Paris offers products and bulk purchase
as the Best New retail launch. In 2014, services to customers across Nigeria. It
Jumia extended its services to Uganda accepts payment options such as Cash
enabling people to shop online and on Delivery, Net Banking, Credit Cards,
have products delivered to this region. Debit Card and Fast Next-Day delivery.
49
Ecommerce in Nigeria will management and strategy

grow not only on deep internet consultancy, “in the United
penetration but also on the back Kingdom, sales in physical stores
of increase in disposable income are lower, due to growth in online
and better education on the shopping, which now represents
process of buying online. If the more than 10% of the UK’s retail
future of retail follows the pattern sales and is growing annually at
which has played out in more around 14% to 16% per annum.
developed countries, then the This is expected to be sustained
future of retail is online. till 2018”. Massive expanssion
of online retail is possible and
According to Roibis, a UK based expected in the immediate future.
50
‘Online retail is
waxing stronger’
A major player in the online retail landscape, Konga is among the most
successful players in the industry. Its CEO, Sim Shagaya, speaks on
development in the industry.
How has e-commerce evolved in

the last 3 years?
With increasing internet
penetration, the way Nigerians
buy and sell is dramatically
changing. Over the past few
years, e-commerce has constantly
evolved from being a foreign
concept to a generally acceptable
and trusted way of shopping.
With the introduction of better
and secured online payment
systems, the fear of using a credit
card is gradually eroding, making
the e-commerce platforms a
soon-to-be mainstream way of
shopping.
A substantial increase in the number

of online retail stores has been The Nigeria’s e-commerce
observed as more business owners market is developing rapidly,
are taking their stores online. Many with an estimated growth rate
businesses in Nigeria now use the of 25 percent annually, and it is
Internet as a platform to advertise believed that the country’s over
and sell their products and services, 170 million population will help
thus reducing physical dealings increase this recorded growth.
between buyer and seller. A Mckinsey report in November
2013 titled ‘Lions Go Digital:
E-commerce has grown so much The Internet’s transformative
that it can now be considered as potential in Africa’, Africa’s iGDP
an important driver of economic (which measures the Internet’s
growth. The recent rebasing of contribution to overall GDP)
Nigeria’s Gross Domestic Product identified that the Nigerian
(GDP), ranks Nigeria as the world’s internet sector contributed about
26 largest economy, and the 0.8 percent to the country’s GDP.
largest economy in Africa, and
it is believed that with growing What is shaping the country and
internet penetration, e-commerce where do you see it in the next
would begin to make a significant five years?
contribution to this growth. A country’s prospects for online
51
retail success are closely related buying everything; every new

to internet penetration and how category we introduce, from books
many people use the Internet. to automotive and industrial
According to data revealed by products are met with strong
the Nigerian Communications engagement and sales.
Commission (NCC), Nigeria had
56 million internet subscribers Give us a demographic
as at September 2013, while description of those who are
international bandwidth brought buying online, where are these
by undersea cables has increased people domiciled?
about 26 times to more than 9,000 Most of the people who buy online
gigabits per second (9 terabits) over are between the ages of 25 and
the past four years. 44. These people are mostly the
upwardly mobile, working class
In the next five years, e-commerce category of people. They have
would be a revolutionary platform more disposable income and are
that solves unemployment and likely to spend more cash than
drives economic growth. It is other age groups.
expected that GDP attributable to
internet would be relatively big in Surprisingly, it seems that the male
Nigeria and e-commerce would be folks buy things online much more
a dominant component of iGDP. frequently than the female folks. On
Konga.com, about 60% of customers
Do you think e-commerce firms are male, and about 40% are female.
in Nigeria are offering the kind
of assortment of products that Predominantly, most orders come
is broad enough to prevent from within Nigeria, although there
Nigerians from buying from are some orders made from other
foreign online retailers? countries. In Nigeria, most of the
Yes, they are. Right now, Konga.com customers are from Lagos and
has a lot of foreign products that Abuja.
have been imported from the all over
the world. This caters to the needs What have e-retailers in Nigeria
of those who prefer to buy foreign not gotten right so far?
made products such as designer It is important to note one can have
wears. We also have local merchants the best website in the world that
on our platform who produce and sell features products with the cheapest
good quality products that can match prices you can find anywhere - but it
those imported from other countries. won’t mean a thing if you don’t have
This, we hope, would encourage the a good logistics solution in place to
growth and consumption of locally enable you to get the right products
made products. to people on time. Prompt delivery
is very important for any successful
What are people buying online online retail business. And in
and what are they not buying? Nigeria, many e-retailers haven’t
We have observed a trend of high gotten that right. This can be
purchases in these categories: attributed to challenges faced in the
Phones and laptops, beauty country such as poor infrastructure,
products, fashion items and home poor transportation system, and a
appliances. Actually, people are dysfunctional postal service.
52
Winning in Nigeria’s
retail market
Winning in Nigeria’s retail market
takes a combination of factors
because of the peculiar challenges
Generally, retailers face
the environment presents. Even the same problems
though retail has become a thriving
industry in Nigeria with 34% CAGR
which all businesses in
growth in the last 5 years, the Nigeria face
operating environment has not
been as conducive as it should be.
Retailers complain about the same takes more than a day to complete,
challenges that other businesses a similar journey would last less than
face, they also have problems which 15 hours in South Africa.
plague their industry specifically.
Recent moves by the federal
Generally, retailers face the same government to revolutionaries
problems which all businesses in the rail system has not yielded the
Nigeria face including the poor desired results yet, while most roads
state of electricity supply, difficulties remain work in progress. Nigeria’s
associated with logistics as well railway network stands at 3,557
as security problems. The general kilometers with 3,505 kilometers still
cost of doing business is high. on the narrow gauge.
This has made major retailers like
Woolworths leave the country. Figures from the national rail
corporation show that passenger
Perhaps the biggest obstacle facing and freight traffic in 1964 was an
retail business in Nigeria is the average of 11.3 million and 2.9
absence of a viable and low cost million tonnes of freight, by 1974
distribution networks connecting these figures had dropped to only
Nigeria’s cities to the sources of supply 4.3 million passengers and a dismal
of their merchandise. This is partially 1.1million tonnes of freight. By 2003
responsible for the concentration of passengers traffic had dropped to
major outlets in such cities as Lagos, 3.0 million while cargo had dropped
Abuja and Port Harcourt. very sharply.
In Nigeria, roads are often in poor According to Nigeria’s ministry

condition, air travel is expensive, of transportation, the total road
there are very few viable air cargo network in Nigeria is estimated at
operators and the rail system is at a 200,000 km, this represents the
nascent state. Anyone who has had principal means for freight and
to transport retail material across passenger movements across the
Nigeria from Lagos, where the country. Road transport assumed
nation’s main port is, to Kano which a more significant role and became
is in northern Nigeria, has to contend the most utilized mode of freight
with an almost comatose railway movement since the collapse of the
line, or a road network which is poor. rail system in the 1970s/80s. Today,
The 1,130 kilometer journey still road transportation accounts for
53
nearly 95% of all modes of transport full potential. Government’s

and estimated N200 billion growing inefficiency at regulating business
at 10% per annum compared with in Nigeria comes in the form of
other developed economies such as double taxation, corruption and
South Africa, UK and US. extortion by government officials,
unnecessary levies and duties,
The present administration across bureaucratic bottlenecks at various
the country has make moves to both government agencies like CAC,
improve rail and road transportation NAFDAC, among others.
across the country. Government has
taken bold steps to embark upon The high cost of obtaining business
Public-Private Partnership initiatives licenses is also a major problem.
geared towards tackling the challenges In Nigeria, it is not uncommon
facing the development of the road for state, federal and municipal
infrastructure in the country. But there government taxes to clash. This
is still a lot to do in this endeavor. imposes unnecessary pressure on
the retailers as they often have to pay
Another major challenge to retail the same levies to the states, central
is the state of poor electric supply
in the country. Generally, poor
electricity supply has lowered the
non-oil sector’s growth in Nigeria,
There is huge burden
GDP figures released by the NBS. of getting goods
Retailers have to provide for
cleared at the ports
their own electricity because the
state’s power supply has failed
to meet the demands of an ever government and in some cases local
expanding population. But there governments. In essence there is no
have been mild improvements centralization of the tax system.
from 2,500mega watts in 2011, the
amount of electricity generated in There is also the huge burden of
the country had risen to 3,751mega getting goods cleared at the ports.
watts, with peak demand forecast Consignments are not only delayed,
pegged at 12,800 mega watts. high demurrages are collected.
Corrupt government officials have
Retail businesses have had to been known to make unnecessary
grapple with having to integrate demands from those bringing in
the huge cost of generating their items for the retail market.
own electricity into their operating
expenses and still breaking even. Also relevant to the retail business
This has led to the higher prices is the security situation in the
and thinner margins for retailers country. While the North East has its
and consequently, the collapse of a own peculiarities, since an Islamist
number of local retail businesses. militant group has continued to
Nigeria operates a mixed economy decimate the population and make
where government plays a role it ungovernable, other parts of
as regulators of major businesses. the country have more amenable
But government policy has not security situation, albeit there are
helped retailers to achieve their the occasional disturbances which
54
occur from time to time.

Making an industry which
A strategy which most retailers
have adopted is the use of private accommodates almost
security operatives which has 30% of the workforce to
also driven costs upward for
retailers. Apart from the occasional function properly should
occurrences of security breaches be a priority
which come in form of minor
robberies at often isolated retail
outlets, the country is stable in engaged in one form of economic
terms of security and the people are activity or the other in 2010, the
warm and accommodating. wholesale and retail trade sector
accounted for about 12.09 million
But there are some challenges which of these, this gives an indication
are peculiar to the retail business of the training need of the retail
in the country. One of which is the sector in Nigeria.
availability of inputs for the business.
Local retailers have had to grapple Online retailers have their own peculiar
with difficulty in getting inputs which challenges, though the industry is
drive modern retail business. There growing at leaps and bounds, its
are few companies which supply development is encumbered by the
basic inputs like software that drive same challenges which face regular
retail businesses, furniture for retailers retail. In particular, it has challenges
and other retail specific hardware. with the level of performance of the
telecommunications infrastructure,
To tackle this challenge, local retailers but this has improved over the past
have had to resort to employing the few years.
services of South African software
suppliers when they are not able to Developing formal retail in Nigeria is
get local software which can drive a task that will take the ingenuity of
their processes, to this end; there is local retailers as well as the structures
the problem of getting the necessary of government to achieve. Foreign
support to keep the software retailers who have come into the
functional. country must make a deliberate
effort to patiently understand the
Also, because the organized retail peculiarities of the environment as
market is still nascent, manpower well as the immense opportunities
remains a major encumbrance. which the country offers.
Like the rest of the country which
has a problem with quality of On the part of the government
manpower, retailers have the same of the day, making an industry
problem. Often, retailers have which accommodates almost
to train attendants to manage 30% of the workforce to function
their outlets because there are properly should be a priority in
few individuals who can match terms of policy. Associations which
the demand of the modern retail operate in the industry should also
environment. Therefore though be at the forefront of effecting
at the national level, 48.53 million legislations which positively
persons were reported to be impact on retail.
55
FACTS FOR INVESTORS

Population 170million (2013 EST)
Location West Africa ; bordered by Cameroon, Chad, the Gulf of
Guinea, Niger and the republic of Benin
Capital Abuja
Main Tribes Yoruba, Hausa, Fulanis, Igbo, Urobo, Ijaw
Religion The northern region is predominantly Muslim
The southern region is predominantly Christians
Language Major local dialects: Yoruba, Hausa, Igbo. Official language
is English
Time Local Time is GMT +1
Visa Visa is required, expect for nationals from West African
countries
Proof of fund to cover the stay and a round-trip airline tick-
et are required, as is a yellow fever inoculation certificate.
Cash is the main source of exchange; credit cards and
traveler’s tuques are rarely accepted except at major ho-
tels, airports, restaurants, etc.
Money Naira (NGN) is the local currency; $1 = NGN165 (2013 avg.)
Note of denominations 1,000, 500, 200, 100, 50, 20, 10 and 5.
Weather Weather is generally favourable year-round; rainy season
peaks April-July
Lagos (southwest)-The populous city in SSA and the com-
mercial capital of the country.
Kano (north) - Second-most populous city in the country; eco-
nomic centre of northern region; has an international airport.
Major Cities Abuja (central)-Capital city and major commercial hub,
with presence of major govt. offices, MNCs and embassies.
Port Harcourt (southeast)-A major industrial centre; large
presence of oil-related MNCs, but also affected by militan-
cy; city has an international airport and two seaports.
Lagos (South Western Nigeria which is also the economic
hub of the country).
Major industrial hubs Lagos: Ilupeju, Agbara, Ikeja, Ota
Ogun State Trade Zone
Lekki Free Trade Zone
Calabar Free Trade Zone
Airports Four international airport and 18 domestic airports
Lagos-Murtala Muhammed International Airport (busiest
airport)
Abuja-Nnamdi Aminu Kano International Airport (second
–busiest airport)
Kano-Mallam Aminu Kano International Airport
Port Harcourt- Port Harcourt International Airport
Telecommunications A number of companies including South African MTN, Eti-
salat, Celtel and Glo. These also provide data and internet
services
Health (southwest) - The Yellow fever inoculation certificate is a must.
populous city in SSA Some zones in the country have HIV prevalence rates.
and the commercial Vaccination against hepatitis B, tuberculosis and meningo-
capital of the country coccal meningitis is recommended, while malaria protec-
tion measure are important.
Private clinics/hospitals are easily available in major cities,
but generally don’t accept medical insurance or credit cards.
56
FACTS FOR INVESTORS

How many meetings Three on average, four if traffic congestion is light
one can realistically
manage in a day
Time from airport to Re- 45 minutes without traffic
naissance Capital office
Travel Largely air and land. Water transport is minimal and rail
transport is being resuscitated
Taxis provided by car rental services and hotels are consid-
ered safe
Major international airlines operate in the country, includ-
ing Virgin Atlantic, Lufthansa, Air France, British Airways.
Meetings A relaxed attitude towards timekeeping is ; business deals
progress at a slower pace than in US or Europe
Greeting in English with a handshake is a common
practice, although women usually do not shake hands es-
pecially in the northern part of the country, and Nigerians
prefers to be addressed by their last name and titles if any
Plugs/voltage Voltage used is 240V, Plugs used are D or G, GSM 900/GSM
1, 800 frequency
Miscellaneous British date format is followed in the country
Banking hours: Mon 0800-01500, Tue-Fri 0800-1330
Country code +234 and outgoing international code is 009
57
Abbreviations
PIB Petroleum Industry Bill
BOI Bank of Industry
MAN Manufacturing Association of Nigeria
AfDB African Development Bank
CBN Central Bank of Nigeria
NBS National Bureau of Statistics
GDP Gross Domestic Product
GRDP Real Gross Domestic Product
EIA Energy Information Administration
OPEC Organisation of Petroleum Exporting Countries
US United States of America
OPEC Organisation of Petroleum Exporting Countries
MPR Monetary Policy Rate
MPC Monetary Policy Committee
NPC National Population Commission
IMF International Monetary Fund
UNFPA United Nations Population Fund
58
59
60

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The Nigerian Retail Report 2014/2015

Sector Report 2014/2015

BusinessDay Research and Intelligence is a unit of BusinessDay Media

The Nigerian Economy 10-12

Developments In Africa’s Retail Market 21-24

Profiling Nigeria’s retail outlets 25-27

Classifying Nigeria retail outlets

Nigeria’s retail power houses 34-39

Nigeria’s major retail markets

Online retail in Nigeria 46-48

Winning in Nigeria’s retail market 53-55

Facts For Investors 56-57

Today, Nigeria is experiencing a tremendous shift to a more sophisticated

More than ever, the Nigerian consumer is interested in a decent shopping

The average amount devoted to consumption has played a major role in

The Nigerian economy

Unemployment situation 54 percent in 2012. So far, sectors

Chart 4: GDP, $bn

GDP per capita (current US$)

Perhaps the greatest challenge less competitive than products

environment for a good number Locally, inflation is driven by factors

Chart 6: Inflation rates

All items (year on change) Food (Year on change)/1

The decline in agriculture has led

Also important is the retail end of the

Chart 10: Manufacturing capacity utilisation

Chart 11: GDP per capita (current US$)

Nigeria South Africa Egypt

Source: World Bank

continued to improve. The degree 49.8 percent occurrence of poverty.

Chart 12: Per capita income ($, 2012)

Chart 13: Life expectancy

Source: World Bank

Chart 14: Population that is poor (%), 2012

Rebasing and the new process gives a more accurate

Sectoral distribution of GDP (pre and post rebasing)

Chart 15: Percentage growth Norminal GDP, 2013

Electricity, Gas, Steam and Air Supply 44.4

The new numbers give a better

Chart 16: Structure of GDP (%) -rebased series

Manufacturing Services and others Mining construction, etc Agriculture

Chart 17: Final consumption in Nigeria (N’billion)

2007 2008 2009 2010 2011 2012E 2013E

One of Africa’s major attractions

Chart 18: The middle class in Africa

72% 72% 70% 60%

1980 1990 2000 2010

Chart 19: GDP, current prices, US$, bn, 2013

South Africa 349.4

0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0

Source: World Bank, IMF

Retail contributed more to most up shops in West Africa, especially

Africa’s Shoprite, which operates in are some positive indications

The IT and electronic section

Attributes leading to switch from traditional to formal retail in Nigeria

Source: Euronmonitor (Nigeria Lifestyles 2010), Accenture (2012)

A number of factors are environment present the platform

Firstly, the population is Nigeria’s emerging middle class is

Retail outlet census, Nigeria