With Nigeria officially in economic recession by the end of the second quarter of 2016, and the local currency continuing to depreciate, the environment for formal, modern stores that depend on the importation of products had become quite unfavourable. This has led to the exit of Truworths International Ltd’s apparel stores early in 2016. A scarcity of foreign exchange at official rates, as the Nigerian government restricted many “unessential” items from using foreign exchange from official sources to import goods, made it impossible for the retailer to re-stock items in its stores. High and skyrocketing rental costs – charged in US dollars – also led to the retailer’s exit. The problem of dollar-denominated rents has also severely affected many retailers in modern shopping centres, which were previously expanding at a fast rate. According to the Founder and Chief Executive Officer of the fast growing Health Plus Integrated Pharmacy chain, Mrs Bukky George, “Some malls are completed but have remained unopened and many opened malls are dotted with empty stores, leading to poor sales for the opened stores,” (Quoted in The Punch newspaper).
In a fragmented channel, the leading player in non-grocery specialists in Nigeria is Vitafoam Nigeria Plc. Its Vitafoam brand has a wide, national presence through which it sells mattresses as well as other household furniture. Through its large number of outlets, it has built up a reputation for quality products.
Non-grocery specialists is predicted to record a value CAGR of 6% at constant 2016 prices, which will be stronger than the review period average of 5%. As also witnessed in grocery retailers, non-grocery specialists is experiencing a change from informal retailing to more formal and modern formats. The products sold in formal retailers tend to be of higher value, given that these products are more likely to be genuine and legally imported compared to products sold within informal retailing. There is also an increasing middle class, which is more sophisticated in its tastes and willing to spend on higher quality products, driving channel growth.
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Understand the latest market trends and future growth opportunities for the Non-Grocery Retailers industry in Nigeria with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Non-Grocery Retailers research and analysis database.
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