Return of Supermarkets

Question: I am beginning to notice a shift from what occurred almost two decades ago, when well-known retail supermarkets wound up their businesses in Nigeria. It seems presently another set of such large ventures are beginning to show up in the country. Please enlighten me on what has made for this change-of-heart by large supermarkets to now show preference for Nigeria (some are even hinting of doing so in a grand scale), and if there won’t be attendant pollution of our ways – Justin Akimbo

supermarket

On polluting your (Nigerian) ways, the reverse is what I perceive will be the case with the return of these large supermarkets, going by present impacts of globalization and their attendant pro-competition and market-economy being the vogue. From a historical perspective, supermarkets (often referred to here as departmental stores) like Kingsway, Leventis, UTC stores operated in Nigeria since the country’s independence in 1960 up till about mid 1990s. They were fallout of post-colonial approach to retail marketing, to cater for the needs of the remnants of British officials (still in government services and multinational companies) and few Nigerian elite shortly after Independence.

The marketing approach these businesses adopted then could not be sustained as the country’s economic environment took different turns. Harsh operating environment in the country, which gathered steam mainly in the 1980s, forced them to commence shutting down some of their operations. The disappearance of Kingsway Stores about early 1990s marked the beginning of complete closure of major retail supermarkets within Nigeria’s business landscape.

These supermarkets folded up mainly for reasons of inability to change marketing concepts that were skewed to favour the rich (vestiges of colonial mentality), and failed to compete as a result. More so, these enterprises could not withstand the policy of the government at the time. The Nigerian government, about mid 1980s pursued import substitution strategy, which was expected to encourage industrial growth within the country in order to reduce imports of manufactured products, save foreign exchange, create jobs, and reduce the burden of dependency.

A supermarket is a form of grocery store (a store that offers a wide variety of food and household merchandise), and organized into departments. In terms of specification, the supermarket typically comprises meat, fresh produce, dairy, and baked goods departments, along with shelf space reserved for canned and packaged goods as well as for various non-food items like household cleaners, pharmacy products and pet supplies.

Most supermarkets also sell a variety of other household products that are consumed regularly, such as alcohol (where permitted), medicine, und clothes. Some stores sell a much wider range of non-food products. Customers usually shop by placing their selected merchandise into shopping carts (also trolleys or baskets) mainly due to preference for self-service, and payment for whatever purchased at the check-out.

The entry of Shoprite, a large supermarket with its roots in South Africa, in 2007 marked the return of supermarkets into the Nigerian business scene. Business has been so favourable for Shoprite that outlets in Surulere and Alausa have been set up, additional to its initial take-off point in Lekki (all in Lagos). It has promised to establish 10 shopping malls spread across Nigeria (hopefully, inclusive of Abuja, Enugu, Port-Harcourt and Ilorin) in due course.

Wal-Mart, America’s foremost low-price merchandise retail store is planning to open two stores in Nigeria soon. It is the largest world’s public corporation when ranked by revenue, the biggest private employer in the world with over 2 million employees and the largest retailer in the world. Wal-Mart has 8,500 stores in 15 countries. Pepkor, another supermarket group which targets low-income earners, plans to open its first Nigerian store before the end of 2012. It intends to setup about 50 outlets in the country much later.

Quite unlike what occurred in the days of Leventis, Kingsway and UTC stores, when the business models were aimed primarily at the rich, and outlets stocked with mainly imported items, this new set of similar ventures now showing up in the country will obviously succeed going by a completely deferent marketing strategy which suits current global trend. The hallmark of their marketing strategy is hinged on more than 75% of products on display being sourced from Nigerian suppliers and farmers. Moreover, they have shown preference for employing and training thousands of Nigerians – A clear source of creating much needed jobs around.

Current government’s efforts towards luring foreign investors, as conveyed by the dynamism of the Minister of Trade and Investment, seem to be yielding fruits. Going by this drift, who says other large supermarkets such as Carrefour, Tesco, Sainsbury’s, Asda, Woolworths, Safeway, Marks & Spencer won’t open their doors in Nigeria shortly? This is coming at a time when the focus of investors have shifted towards Africa (with a market of almost a billion people, huge resources and a young population), and Nigeria occupying the centre stage. There is no doubt that the attraction of the Nigerian market has bearing on the country’s fast growing middle class (which earns between N80, 000 and N100, 000 monthly or about $6,000 – $7,500 per annum).

In spite of ugly incidents of insecurity, as championed by “Boko Haram” (whose wings I believe will be clipped shortly), Nigeria still remains an attractive destination to investors with keen interest in emerging markets. I call on Nigerian businesses too, to join the ‘band wagon’ and get positioned to reap from this new trend.

Advantages of the supermarket, which include the following must not be overlooked: Price tags making for easy purchase; provision for purchasing all items under the same roof; products being usually offered at low prices from reduced margins; often afford fresh products due to regular offloading of stocks; make available promotional offers; afford lower merchandise cost from economy of scale; offer better variety of goods; often replace items returned when customers complain, etc.

With the advent of these supermarkets, I perceive the development of a “supermarket culture” in Nigeria shortly – A deviation from the current prevalent exploitative haggle pricing system.

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