"HUGE POTENTIAL OF NIGERIA'S RETAIL INDUSTRY"SAYS CEO OF BROLL

BARRIERS TO INVESTMENT HINDERS GROWTH IN NIGERIA'S RETAIL SECTOR

At a recent breakfast meeting at the Nigeria-South Africa Chamber of Commerce, Mrs. Erejuwa Gbadebo, CEO of Broll, a leading property services group in Africa, highlighted the huge potential of the real estate industry as a viable alternative source of income for Nigeria's economy. Mrs. Gbadebo highlighted the fact that growing urbanisation, demography, technological developments, natural resources and financial deepening are five trends  powering Nigeria's appeal to foreign investors. She also stated the challenges that Nigeria faces in developing the retail landscape including the unclear legal framework of purchasing land, the lack of inappropriate and innovative building techniques and lack of up-to-date market data. The impact of the challenges mean that Nigeria's real estate sector, according to Mrs Gbadebo, contributes to only 1.79% of the nations GDP as opposed to 10-15% contribution in other emerging markets. Coincidentally the McKinsey quarterly, a business journal, also recently reported on the rise of the African consumer market as the single largest business opportunity. Growth potential in Africa, according to McKinsey, is estimated at $400 billion by 2020. But yet again there are obstacles in reaching this, this time by the retail companies unable to translate the potential into action.

 Calls on the Nigerian government to lift bans on some areas of foreign trade has been heeded but more needs to be done to drive foreign and local investment. This will help grow the retail sector, aiding in the rise of further development of shopping malls and other areas of real estate.

THE SINKING OF SABUNTA

It was not long ago that my sister, her friend (both alumni of Oxford University) and i were discussing the potential of on-line retailing in Nigeria around the dinner table. I was stating that with no real competitor in the market the gap is certainly there for someone to launch a site to cater to fashion conscious Nigerians, so my sister and i began brainstorming business ideas that we could bring to fruition. It was to my surprise (horror) that my sisters friend proclaimed that in fact there was a website that had recently been actualised for Nigeria selling both international brands as well as domestic fashion labels.

My sisters friend is from Germany and she is very familiar with the businesses of the Samwer brothers who also hail from Germany and are otherwise known as the copy cats of the tech world. Not content with conquering the European and South American tech markets the Samwer brothers, through their start-up incubator Rocket Internet, now wanted to conquer Nigeria!

The site was called Sabunta and looked very professional with HD pictures and a variety of brands to purchase from. They did minimal advertising but were managing to attract customers who gave favourable reviews.With unlimited money being pumped in from Rocket Internet  they were definitely going to retain their position as market leaders if anyone else dared to enter the fashion e-commerce realm. How was i therefore going to be able to compete against them if i launched my own site? And what did the Samwer brothers know about the Nigerian market? I scoffed at the concept of these brothers doing business as a non-Nigerian in Nigeria;how would that work without help from somebody based there?

Until research led me to somebody called Tunde Kehinde, co-founder of Rocket Internet Nigeria, MBA educated from Harvard Business School and co-founder of Bandeka.com, an online internet dating website for people from Africa. Great credentials. Hmmmmm....

So how amusing for me to read several months later that the Sabunta ship is sinking. Well to be fair it has already sunk. They have consolidated the Sabunta site and merged it with their other site Kasuwa to form Jumia. Same template website but sales are not just focused on fashion but also on electronics, games, beauty and errrm.... everything similar to what Amazon provides. Downsizing of operations staff has occurred whilst senior management jobs still retained. 

So now all eyes are on Jumia. This model should prove more profitable for them and i would be interested in hearing what the man behind Rocket Internet Nigeria , Tunde Kehinde, has to say about the new direction they are taking. What i do know is that any future failures would be a sign that perhaps either Rocket Internet are not cut out for the Nigerian e-commerce market or Nigeria is not yet ready for the e-commerce market. What do you think?

READ MORE (Techloy did a fab article on this)

BRICKS AND MORTAR NIGERIA;$124 MILLION DOLLARS TO BE INVESTED IN RETAIL SECTOR

The Persianas Group, the developers of the Palms Shopping Mall in Lagos State,the Polo Park Mall in Enugu State and two further malls currently under development in Kwara State and Oyo State, are to receive $124 million or N20 billion from the IFC, a member of the World Bank Group, to tackle the underdeveloped but rapidly expanding retail and commercial property market in Nigeria. 

The Persianas Group's aim is to build a portfolio of internationally specified purpose built malls which will have several positive impacts for the nation including rollout of 'modern' food retailing, direct and indirect employment which of course is much needed in Nigeria, development of business infrastructure which will attract further foreign investment and payment of tax revenues that will accrue to the government (lets hope the money is  actually pumped back into redevelopment of the country rather than to individuals pockets...)

Mr Adetayo Amusan, Chairman of Persianas Group, said “IFC’s investment in Persianas demonstrates a commitment to supporting Nigerian entrepreneurs and is critical to preparing Persianas for our next phase of growth. This investment will help real estate development contribute to more jobs in businesses offering safe and healthy consumer products and services.”

READ MORE

LUXURY SECTOR POTENTIAL TO DRIVE AFRICA'S ECONOMIC GROWTH

On November 15th-16th 2012,the International Herald Tribune will host its annual Luxury conference in Rome discussing  the potential and growing influence for luxury goods and global luxury brands in the continent of Africa.
Amongst the exciting line up of speakers, which include the biggest names in the fashion industry such as Donatella Versace, Lauren Bush Lauren, Jean Paul Gaultier, Manolo Blahnik and Sylvia Venturini Fendi, also includes Nigerians Duro Olowo, Fashion Designer and Omoyemi Akerele of Style House. 
The agenda promises to discuss Africa as a potential luxury consumer and producer along with the impact of Chinese investment in Africa, the new generation of luxury consumers and how technology is opening up new channels for luxury retail.

Naturally, luxury investment in the continent will steer towards the most developed of markets and areas of increased tourism. I predict conversations will be based on established markets in Sub-Sahara Africa such as South Africa. Kenya will feature because of the rise of its tourism sector and introduction of luxury holiday and tour packages. Angola, Africa's third biggest economy, has a growing population of wealthy individuals, mainly due to their growing oil exports. Nigeria, of course, Africa's second biggest economy, which has seen an influx of foreign investors entering the market encouraged by the rising population of the middle class. Areas of North Africa will be acknowledged despite recent adversities, amongst other smaller countries in the continent that have a growing middle class and attract a relative number of tourists each year.

Ticket prices, set at £2495 excluding VAT...(exactly!), reflect the quality of speakers invited and the businesses that will be in attendance. One can only dream of attending such an exciting and progressive event for our continent.

To register and book tickets for the event click here

DOMINO'S PIZZA FRANCHISE OPENS IN NIGERIA

I remember when working for British Airways on a stopover trip to Lagos, during my stay at the Sheraton Hotel  i decided to deviate from the traditional foods i would usually steer towards;jollof rice or pounded yam and some type of soup and decided instead to try their pizza. Having been bitterly dissapointed in the quality of pizza i had tasted the previous year on a non-work visit to Enugu State, i felt that an internationally known hotel such as Sheraton would produce a pizza similar to the quality i am accustomed to back in London. 

After waiting patiently for over 30 minutes (salivating with anticipation of a Nigerian 'baked from scratch' pizza, otherwise what could be taking so long?!) i finally saw the waiter heading towards my table. I was immediately horrified by the sight before me. The pizza looked like burnt Akara with something on top that resembled cheese with chicken as my topping. Needless to say i did not eat it. 

Now a few years later Domino's Pizza, one of the worlds largest Pizza chains and the second largest in the United States, has arrived in Nigeria. Setting up shop in Victoria Island, Lagos, the master franchisee is Eric Andre of Eat 'N' Go Restaurant Group. They have already set their sights on expansion across the country to the delight of Nigerians. With the rise in smartphone use to access the internet within Nigeria, Domino's Pizza can emulate and implement the business model which takes place at their other 10,000 plus stores across the world by allowing Nigerians to order pizza, via their mobile phones, to be delivered to their home address.

"Establishing ourselves in this emerging West African country presents a great opportunity for our business, and continues our global momentum as a brand," said Ritch Allison, Domino's Pizza executive vice president of international. "We have a great operator in Eric - his knowledge of the business landscape will be instrumental in making Domino's Pizza the leading pizza brand in Nigeria."

RETAIL GOLD RUSH FOR SOUTH AFRICA

Not content with having attracted big brand names such as Superdry,G-Star and Steve Madden (within the last year i must add), the Spanish retailer Zara has now launched in South Africa. With the rise of the middle class population and increased purchasing power, spending on clothing and footwear totalled £6.6 billion last year making South Africa an optional choice for international retailers affected by the downturn in spending by consumers tightening their purse strings. 

Because South Africa has the infrastructure available to attract and accommodate these big brand names, retail growth can only be set to increase. Thomas Pink, under LVMH Louis Vuitton Moet Hennessy, recently opened their doors in June with Topshop due to open their doors in the next few months. 

So what is the sudden interest in Sub-Saharan Africa? 

The economy in this region has grown 5.2% a year over the past five years according to the International Monetary Fund, affording consumers with disposable incomes to spend on non-essentials. The expansion potential into other parts of Sub-Saharan Africa is also huge with South African domestic retailers already looking at expansion plans into countries such as Angola and Nigeria. Certainly the economic crisis in Europe has slowed down sales for international retailers so expansion overseas is on their radar and with the 'S' at the end of BRICS pertaining to South Africa, it is unquestionably a country retailers are nurturing . 

READ MORE

THE WORLD'S LARGEST CREDIT CARD COMPANIES HAVE ARRIVED

With the growth of e-commerce in the continent one must consider the implications faced by those who wish to purchase online. Online security all over the world, is always going to be an issue for deliberation when people use their credit cards to pay for goods and the more an online company can assist in safeguarding payments, the more consumers will feel safer and more confident in the online shopping experience. 

As an emerging continent in the online commerce world what better news to hear that Entersekt, a mobile security software development company, has in the last six months acquired Visa, MasterCard and now American Express accreditation to provide transaction authentication for online and mobile payments.

With their head offices in South Africa, they have already signed up a number of South African banks to provide transaction authentication for online and mobile transactions. The CEO of Entersekt, Schalk Nolte, recently commented, "With the advent of e-commerce, the need for fraud prevention technology is higher than ever. Statistics show that fewer people are trading in hard cash, opting to rather conduct their transactions online," 

So what does this mean for the customer in this part of the world? More control over our transactions, reduced possibilities of fraud and an overall more confident approach to online shopping. 

Says Nolte: "Entersekt is committed to enabling mobile and online financial transactions and to providing solutions to combat fraud. We are very proud of our AmEx accreditation and the support we have received from American Express in this process."

Very big smiles all around then.

READ MORE

TRACLIST;ON THE RIGHT TRACK?

Traclist is a Nigerian on-line search engine that is able to search for a product and  provide results of retail stores in Nigeria that stocks the item you are looking for.

Not a particularly exciting website and clearly they have not built many relationships with retailers as search results return little choice of retailers, however it is a great idea and will be very effective if they develop the site further. With the potential to be in the same league as one of my favourite product sourcing websites, Kelkoo, i  do hope that those behind Traclist put in the time and effort to easily become Nigeria's leading retail product sourcing website.

SHOPRITE; THE TESCO OF NIGERIA

Recently i wrote that bricks and mortar retail is set to grow in Nigeria... well here is further proof! 

Shoprite is set to invest $205 million on real-estate in Nigeria to take their store presence to 13. Their ambition to grow in the nation is currently hampered by the lack of infrastructure in key states such as Port Harcourt, so their solution? Develop it ourselves.

 A business model that Tesco supermarkets has used successfully to conquer the UK is to develop an under-developed area with its store as one of the main attractions. The expansion of Shoprite and plans for infrastructure development can only be seen as an exciting advancement and positive advertisement that Nigeria is an attractive investment. Shoprite, already committed to sourcing local produce, giving back to local communities and supporting foundations, will now also further provide employment opportunities if they succeed in their investment plans. Definitely an expansion to keep an eye on....

E-COMMERCE;KING KONGA CONQUERS LAGOS

From the founder and CEO behind the popular group purchasing website, Deal Dey, comes the highly efficient Amazon style website Konga.Com.

 Selling an array of products ranging from baby care to make-up, Konga.com is a site that is revolutionising the way Nigerians shop. With the rise and rise of e-commerce purchasing in Nigeria, Konga.com is setting the benchmark of how to run an efficient e-commerce business,with a user friendly website and promises of deliveries within Lagos State aimed at 24 hours after ordering on-line. It is worth a mention at this point that even in London, if you require guaranteed delivery within 24 hours this is a feat that would incur a separate express delivery charge of around £5 to £10 additional to the normal delivery cost; Konga offers delivery for free on purchases over N2000.

On their website Konga state that they are, "...obsessed about great customer service..." and they, "...delight in doing things that people generally believe cannot be done." I have been monitoring feedback about Konga for a while now through various social media platforms and those who have used the site and purchased goods are providing positive feedback in all cases. Konga are certainly living up to their boastful words, with each customer proclaiming that Konga remains consistent in their promise to deliver on time and in full.

So what next for Konga? I would think expansion to other states in Nigeria. I do like that they are not being overly ambitious and trying to conquer everywhere at the same time because logistically they may not have been able to build such a fantastic reputation like they have from just concentrating in Lagos. One thing i would like them to to do is have a word with some of our UK logistic companies;they can learn a thing or two from Konga....

EBEANO SUPERMARKETS;REVAMPED,MODERNISED AND READY TO CATER FOR THE DOMESTIC MARKET

Although foreign investment is always important for any healthy growth of a countries economy it is important that governments encourage the growth of domestic companies in order to further stimulate the economy by providing jobs for local labour markets. Ebeano Supermarkets is an example of such retailers that should be heavily encouraged and supported by the government to expand in the market, in order for them to compete alongside big name foreign retailers such as Shoprite. 

Ebeano has recently modernised its store layout  and adopted the use of point of sales (POS) systems for payments at the checkout. This will not only encourage efficiency for workers and a better service for customers but will also allow Ebeano to better manage their inventory to see what products sell well or otherwise thus ensuring they are always catering to their local consumer needs. A pharmacy has also been added in-house, allowing for local residents to shop for beauty, health and medical products at similar prices as the bigger retailers. Lets see more support for domestic retailers please!

RETAIL EXPANSION?TRY NIGERIA

                                          NIGERIA OPEN FOR BUSINESS?

It is a declaration that has been promoted to foreign investors at conferences, trade shows and seminars over the years and perhaps a declaration that, more often than not, has been disregarded by many investors as unimaginable but it is a declaration that is slowly gaining traction, especially in the much neglected retail sector. As the second largest economy in the continent and with the rise in purchasing power of middle class Nigerians, the appetite for them to purchase consumer goods in a formal retail environment has been acknowledged by both domestic and foreign retailers who are slowly waking up to the potential opportunities of catering to consumer needs. 

Both the grocery and non-grocery retail markets are burgeoning, with the well known European store Spar opening their doors to the public recently in Lagos and Abuja. Shoprite, the continents biggest retailer, continue to go from strength to strength in Nigeria with their most recent opening of their fifth store in June. The Artee Group, whose core activity is focused on retail and who manage a number of retail operations in Nigeria, including Spar, are currently in the process of expanding their portfolio in the non-grocery sector allowing for opportunities to join brands such as Mango and Woolworths. 

Sceptics are still cynical that Nigeria does not have the infrastructure to allow for growth in the retail sector, with shopping malls either not meeting the standards required by foreign retailers or big cities such as Port Harcourt, not having any shopping malls thus restricting foreign retailers potential plans for expansion. However with reports and evidence recognizing the power of Nigerians spending both at home and overseas there is no doubt that foreign investors will try to overcome the many hurdles they may face in order to take a slice of Nigeria's fast growing economy. Nigeria is certainly open for business for those who are undaunted.

Read More

GREEN LIGHT FOR SIR PHILLIP GREEN; TOPSHOP TO LAUNCH FLAGSHIP STORE IN S.AFRICA

TOPSHOP TO LAUNCH IN SOUTH AFRICA

The Arcadia group is expanding its portfolio of shops to South Africa after successfully breaking into the U.S market.The success of their recent pop-up shop on the first floor of South Africa retailer Unknown Union in Cape Town gave Topshop and Arcadia Group owner Sir Phillip Green the green light they needed to launch their own flagship store due to open in November in Sandton City. This is a testament that western retail outlets are finally waking up to the huge potential of the Sub-Saharan countries with Topshop following on from the likes of Western retailers such as Zara and Mango who have entered the market in the last few years.
Read more Topshop South Africa