South African grocery retailers targeting smaller cities in Nigeria
According to financial consultancy Renaissance Capital (Rencap), South African grocery retailers are increasingly looking beyond the metropoles of Lagos and Abuja to smaller cities in Nigeria. For example, Massmart, Woolworths and Shoprite all recently opened outlets in the eastern city of Enugu. Meanwhile, both Massmart and Shoprite are reported to have plans for opening shops in the northern city of Kano during 2013. However, Rencap also pointed out that a combination of severe flooding, higher fuel prices and the delayed implementation of a number of infrastructure projects were squeezing local consumer spending.
Nigeria in 2030 – Euromonitor International
Middle class consumers increasingly favour supermarkets
According to the website Businessday, “With the recent entry of big retail shops like Shoprite, Spar and Massmart into the country, Nigerian consumers have become aware of the benefits of shopping in a more conducive atmosphere, rather than the usual rowdiness and tedium of the open market.” Emeka Okos, who lives in Lekki, a Lagos suburb, said: “Apart from the convenience, the prices are good and the quality of the product is assured, unlike in the open market, where you can easily buy substandard products. Again, here you can always return a product if there is any problem with it.” According to company secretary Uche Onyema, who lives in the Lagos suburb of Festac: “These stores provide a convenient shopping experience. You don't have to sweat under the sun just because you want to buy things. This place is well air-conditioned; items are well arranged with their prices, so you don't need to waste time haggling like in the open market. It is very convenient, and that is why I can afford to use my lunch time to shop for things I need in the house.”
Consumer interest in healthy food growing
A survey of 700 consumers conducted by newspaper Business Day Nigeria during October 2012 found that while price was still crucial to the Nigerian consumer, health considerations were becoming more important. 50% of respondents said that they read the labels of packaged food and beverage products before purchasing them. 39% said that they would like to see more nutritional information, including calorie counts, on restaurant menus. The newspaper concluded that “Nigerian consumers are becoming more sophisticated.”
Developing a taste for wine
Wines of South Africa (WOSA), an industry body representing that country's wine exporters, has indentified Nigeria as a promising market. Su Birch, CEO of WOSA, said: “Many of the global luxury brands have entered the Nigerian market and these include several famous-name spirits, as well as champagne brands whose products are being welcomed by the country's affluent consumers. We know anecdotally from a number of South African producers that there is a robust appetite for premium wines.” According to Euromonitor International data, wine consumption in Nigeria rose from 18.8 million litres in 2006 to 44.3 million litres during 2011. Moreover, it is expected to rise by a further 80.4%, to 79.9 million litres, by 2016.
Luxury carmaker aims to sell 300 vehicles a year
German carmaker Porsche officially opened its first Nigerian dealership in the heart of Lagos' wealthiest district, Victoria Island, on March the 16th. It will mainly sell SUVs like the Cayenne, as the company thinks these will be better suited to the city's pothole-strewn roads, which frequently flood during the rainy season. Porsche also plans to set up an operation in the capital Abuja, but this will concentrate more on sports cars like the 911 because most of the city's roads are newly built.
Porsche Nigeria general manager Julian Hardy estimates that around 200 Nigerians currently own Porsches. The firm aims to sell 100 vehicles in Nigeria during 2012, rising to 300 a year thereafter. Average prices for these vehicles currently range between NAR21 (US$133,000) to NAR30 million (US$190,000). According to Euromonitor International data, 0.4% of Nigerian households had an annual disposable income of more than US$100,000 (at purchasing power parity) during 2011.
European fashion buyers come to Lagos to sell Nigerians their own
Lagos Fashion & Design Week, which was held in Lagos over four days from October the 24th, attracted European buyers from the likes of UK-based Selfridges & Co. and German online retailer MyTheresa.com to Nigeria for the first time. According to the website Salon.com, local designer Ituen Basi's collection “evoked fun and glamour through its use of print and colour – characteristics which have come to define the vibrant local fashion scene.”
However, rather than attracting European consumers, these retailers are primarily interested in selling designer clothing to affluent Nigerians on shopping trips abroad. Bruno Barba of Selfridges & Co. said: “Nigerians are among our highest-spending foreign customers.”