Offline Retail in Nigeria: The Growth, The Big Bubble and The Big loss
- January 22, 2017
- Posted by: admin
- Category: Retail
The retail space in Nigeria has experienced phenomenal growth over the last decade. The trend has been sustained by a few fundamentals including a growing middleclass, increasing urbanization and infrastructural development especially within the financial capital – Lagos.
Large retail brands within the country have continued aggressive expansion of their footprints as more and more Nigerians are demonstrating preference to shop in large retail outlets compared to smaller neighborhood supermarkets. The reasons range from the perception of lower pricing, access to variety and many see it as some sort of adventure and leisure experience.
The Big Bubble
There is thus a perception that “there is a shower of money in retail business” and many Nigerians are investing in establishing their own formal retail outlets complete with air-conditioning, fancy display racks and a couple of checkout points. Most are still midscale supermarkets at best. Many are situating their outlets within the radius of upscale urban settlements and these locations are crowding out quickly. Supply would soon outweigh demand and yet NON – including the big players such as Shoprite, Spar and Ebeano has a differentiated offering. The major difference between these big players and the midscale ones is just the retail floor space!! It’s a component of a key profitability metrics in retail but it just points to the fact that the phenomenal growth has not reflected in innovation. Service levels are not exceptional and characterized by long queues.
The Big Loss
Retailers of the future are those who are capturing critical consumer data NOW. The big loss is the loss of data. Digital is the future and the revolution is here already. Without consumer data, it will be practically impossible to serve the future consumer without digital interventions and it would result in loss of value.
Retailers need to begin to take KYC more seriously than banks. Such cannot be enforced but there is a large generation of millennial consumers who would willingly volunteer information in exchange for better service even if it is perceived. Retailers can create their own ecosystems and become even more powerful than banks. Banks just manage money; retailers know how money is spent – or do they? Some retailers do have big data if they have loyalty cards and are making use of 21st century point of sale systems. What is however clear is that the various loyalty programs are not working as they ought.
First, there is an intelligence required to understand the data points that need to be captured. Secondly is then how to analyze the big data and give it executive expression required for decision making. Being able to categorize the consumers and gain insight into consumer purchase journey, buying patterns, frequency, lifetime value etc. can yield tremendous results and create unmatched value in the Nigerian retail space. Digital can go as far as help retailers predict the inventory levels of various consumable items in households of their buyers. Imagine what such insight can do for retailers.
Digital can revolutionize the retail experience of consumers and take customer service several notches higher. A midscale retailer who begins to take digital interventions seriously will in no time surpass the current big players in value creation and subsequently in size.
This is the BIG LOSS currently going on in Nigeria’s retail industry. At Enzo Krypton and Company, we can help to stop the bleeding and put you on a path to capture current value and very critically position your business for the future of retailing.