Discounters in Nigeria

PROSPECTS

Growing consumer awareness supports the channel’s performance

Discounters remained an emerging channel in 2018, with the first outlet opening only in 2015. In 2018, there were only two players present, although awareness of the channel is growing due to its low prices and wide variety of products.

High inflation drives consumers towards discounters even as the economy improves

The extremely high rate of inflation in Nigeria since 2016 meant that prices remained high in 2018 despite the economy growing slowly. The economy is expected to improve over the forecast period but it is not clear if the Nigerian naira will strengthen significantly, meaning that prices are likely to remain high.

COMPETITIVE LANDSCAPE

Dia leads discounters

In 2018, Dia, the pioneer of the channel in Nigeria, remained the leading player. The operator of Dia focuses on opening outlets close to residential neighbourhoods, aiming to attract busy consumers in these areas who are looking for convenience and do not want to travel longer distances for their shopping.

U-Save ranks a distant second

In 2018, the second and only other discounter banner, U-Save, continued to have only one outlet in Nigeria. U-Save was launched barely two years ago by Retail Supermarkets Nigeria, the owner of the successful hypermarket chain Shoprite, and has performed well since then.

Other modern grocery retailers likely to enter this channel

Discounters, which is still an emerging channel, is becoming more attractive and profitable, with the likelihood being that it will also attract players from other channels which also offer a wide range of products. Just as the brand owner of Shoprite saw the potential in adding a discounter brand to its portfolio, larger chains will also likely recognise the benefits of venturing into the discounter channel, especially as many consumers are increasingly looking for discounts and bargains.

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