NIGERIA;RETAIL LAND OF OPPORTUNITY. PART 1; BALOGUN MARKET

So since my last posting i decided it was about time to put my research,writing and thoughts on the continent into practice by actually visiting and conducting some on the ground research into the retail market.
Destination choice; Nigeria
State;Lagos.
Length of stay; a short ten days with an action packed itinerary befitting somebody with knowledge of and the means to get around Lagos; I didn't have either.
Areas of interest;the formal retail market (shopping malls) and  informal retailing; Balogun and Mushin Market.

So how did my visit go? Firstly i must remark that the the temperature was excessively hot (not that i'm complaining now that i am back in the UK...) so i must commend the market traders who spend time in the heat day to day trying (and certainly succeeding) in making a living.

 Having researched chosen  destinations to visit whilst in Lagos using a number of websites and print media, including the Delta Airlines Sky Magazine, which interestingly is absolutely fantastic in their guide to visiting Lagos state (most of my destinations for checking out the Lagos retail market came from this site) i set about commanding family and friends to organise the logistics to get me to these destinations. Naturally, when you are not 100% familiar with a territory, one can be disillusioned into believing that destinations are relatively easy to get to, thinking the city is small enough to navigate around. So when i was met with coughs and splutters from family and friends to the requests of me needing to get to places such as Balogun, Mushin and Makoko, i was puzzled and saddened by their reaction. I was even warned against going to the markets for a number of entertaining reasons. I tend not to pay attention to warnings.

First destination on my itinerary was Balogun Market. A three hour taxi journey later i understood why my family and friends suddenly found themselves "busy". Speaking in a British (?) accent and probably paying over the odds for my taxi ride, i arrived at Balogun market to be greeted with a colourful chaos. Balogun is a textile market where allegedly you find all the best West African fabrics. The Delta Airways Sky magazine cites that if you visit this market you earn bragging rights for navigating it...so time for me to brag! It was an amazing experience! Among the hustle and bustle, people are making their money, although competition seems fierce as there is literally rows and rows of stalls selling similar or the same Ankara material and the like. Price collusion is rife; every stall charges the same price for fabric, or rather they did to me (British accent causing me problems). I had managed to persuade a friend, who had initially informed me that they had never been to Balogun before, to meet me at the market. Quite fascinating that they had not visited the market, despite the fact they lived less than 20 minutes away.  I began to get the impression that the markets, or at least Balogun, were only for a particular type or class of Nigerian. Hmmmm.....

Market traders were jolly and enjoyed the fact that i was sweating profusely whilst trying and failing miserably to negotiate prices for materials. The market itself is HUGE and absolutely heaving with shoppers. It is however a health and safety nightmare!(see picture above)  I wondered how much money was changing hands here, the total revenue incurred from this massive hive of informal activity. I also partially hallucinated (it really was ridiculously hot) that the market was indoors, where shoppers, such as myself of course, could bask in air conditioning whilst looking at all the lovely fabrics. Or at the least be indoors so that there was shade from the scorching yellow object in the sky. Thoughts of markets i have visited in Shanghai, China, popped into my thoughts, as they were indoors but still very much in the style of outdoor markets with each trader having their own stall. Anyway back to reality...scorching heat.

N.B:I later found out that there is indeed a mall recently constructed in Balogun but  tenants are currently going through problems with the owners and have been evicted. Of course the mall can only house the select few who can afford to pay the rental cost so ultimately the outdoor market will prevail.

I was also impressed by the vast number of stalls selling womens clothing. Lots of on trend clothing imported, no doubt, from China, U.S or Europe. And there were lots of women buying. LOTS. The retail potential for Womenswear in Nigeria is ridiculous but yet there is clearly a lack of formal retail outlets and malls. Build a Mall of America, a Westfield, a Mall of the Emirates and fill it with a combination of western, Nigerian and continental wide African designers and watch the formal retail economy boost Nigeria's GDP...! A no brainer really.

Verdict: Overall, a successful and exciting experience. I left the market armed with two 6 yard Ankara print material and a feeling of pride of having negotiated/conquered this busy market, despite the warnings.
Mushin here i come!

HUGO BOSS; LAGOS VIA GERMANY

With the developed world continuing to take more of a business interest in emerging markets it is only befitting that luxury retailers are grabbing a piece of this lucrative pie. The launch of Hugo Boss at the Palms shopping mall brought out guests and celebrities from the banking, fashion and entertainment industries. Sponsored by Moet et Chandon, it was reported to be a lavish and sophisticated affair that sponsors the image of the brand.
For me, my excitement of this launch is the possible ripple effect and influence this store opening will have on the  continued growth in the number of luxury retailers who will make their first move into the Nigerian retail market. My long term vision and impact of this growth would be for the manufacturing of the garments to take place in Nigeria or at least within the ECOWAS trading bloc...

Yes i know...one step at a time...

But with last years IHT Luxury Conference attracting over 550 delegates, all celebrating and promoting the potential of the luxury fashion industry in the continent, this maybe a vision that  may come into fruition sooner rather than later...!

SUPERMARKETS IN,KIOSKS OUT! THE RISE OF CONVENIENCE SHOPPING CRIPPLE KENYA'S INFORMAL RETAIL MARKET

Uchumi;One of Kenya's leading supermarkets

  Leading supermarket chains in Kenya are expanding from their usual city-centre focus into residential areas creating convenience for shoppers to purchase all their requirements under one roof but meaning that this will impact on resident kiosk owners. Supermarket owners argue that they are not killing business for the kiosk owners, but state that kiosk owners have the benefit of late night convenience, cheap operations and the ease to move their operation to areas of their choice if the market for their products declines. 
Driving the growth of the supermarkets is the emergence of the middle class who prefer to shop in formal settings, citing reasons such as convenience, pricing and good facilities as opposed to the markets or 'Duka' as they are known in Kenya.  
“Kenyans are (therefore) exploiting this accessibility and convenience to shop for consumables such as bread, milk and groceries on a weekly basis,” said Consumer Insight Managing Director Ndirangu wa Maina, the company behind a survey conducted to investigate consumers shopping habits.
 The slow death of kiosks is also being attributed to the frequency in which consumers shop. The survey highlighted a 40% increase since 2011 in consumers buying their necessities weekly. Consumers that shop two or three times a month remain unchanged at 22%.
 “The trend towards weekly shopping is a factor of the personal economic insecurities amongst Kenyans. With the high cost of living, many people are weary of emptying their barrels in one round of shopping and prefer to space it out,” said Uchumi Supermarkets Chief Executive Jonathan Ciano.
Kiosk owners and non-supporters of the growth of the supermarkets believe that the government should wade in to put a restriction on the supermarket invasion. Job losses will be felt throughout their small supply chain impacting on the neighbourhoods in which they operate. Mr Ciano agrees that there are risks to the future of the kiosks when the supermarkets evolve. Despite the reasons why they may still play a key role to local residents, the challenge will certainly remain for them to compete against large, well-stocked supermarket stores. Is this the beginning of the end of informal retailing in Kenya i wonder...?

"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