The 2019 economic outlook for the rapidly increasing Nigeria retail industry indicates a mixed revenue growth for retail businesses amidst huge growth opportunities. These were the views Nigeria retail expert and President of Bervidson Group a leading retail and brand consulting, training, coaching and development group in Nigeria.
The retail business segment is projected to grow at a low pace this year —no thanks to factors which are predicated on the government’s actions and inactions over the years.
Expectedly, retailers want the government to become more sensitive to the sector’s growth to deal with the teeming population.
A retail and brand consulting, training, coaching and development group, Bervidson Group, owned by Mr Joseph Ebata, observed that the country is projected to grow by 2.3 percent according to IMF, much of which is likely to rob off on the retail industry.
According to him, amid a global retail industry going through a challenging phase that has seen many store closures, the industry is experiencing a transformation that is driven by changing consumer preferences, heightened competition from nimble new entrants, a rising ecommerce trends, and dynamic socio-political environment.
In particular, as the country heads for general elections next month and with political calculations daily shaping the issues in the socio-political space, visionary business owners and leaders cannot afford to stay aloof.
Ebata, founder of Retail Association of Nigeria (RAN), observed that political uncertainty and downside risks related to the elections and politics are high, likely putting reforms on the backburner and delay the 2019 budget.
The above notwithstanding, the expert said it expected to see growth in the industry. The industry would continue to evolve and retailers would face challenges as they address a highly competitive marketplace and adapt to changing consumer preferences and expectations. Successful retailers would need to have their eyes trained on a various issues affecting the industry and their businesses, he added.
“Expect a mixed revenue growth. Some organisations would experience
revenue declines (negative same-store sales or store closings) and others
would continue to increase their top-line revenue”
The Bervidson Group chief expects mixed revenue growth. Some organisations would experience revenue declines (negative same-store sales or store closings) and others would continue to increase their top-line supported by favourable sector dynamics such as value retail or via e-commerce and geographical expansion. Growth for leading retail organisations would come from experimenting with store formats, product and pricing mix, mergers and acquisitions, and strengthening e-commerce presence and propositions.
Ebata assumes slow but continued Gross Domestic Product (GDP) growth rate is predicted by IMF), expected wage growth arising from minimum wage rise demand by labour (stimulating consumer spending, but pressuring retailers’ margins), and continued significant investment in e-commerce by most retailers. For most retailers thinking growth, some success imperatives would be increasing e-commerce presence and propositions, saving costs in the supply chain, and lowering operating expenses.”
He further assumes also that some retail organisations will fail to adapt to shifting consumer preferences and consumers will become even more cautious and hardwired in seeking value. “We see stiffer competition from aggressive new entrants, rising tax regimes (VAT in particular) and/or more pressure to collect taxes by government that will disrupt retail supply chain economics or raise costs and pressure margins for retailers,” he said.
Bervidson sees the Nigeria retail industry benefiting from many international retailers looking for expansion in new locations around the world in order to gain more profit and bigger market share as they turns their search light on Africa continent as the new global franchise opportunities destination. Same is true for retail technology companies. However, global expansion will benefit more retailers with a solid mixture of local knowledge, appropriate retail premises, a proven business model, significant customer base and appropriate store footprint (size and spread).
“Customer experience will become the new retail currency
and experience per customer interaction will be the
new critical retail metric to measure success.”
It also sees customer experience becoming more important than ever as retailers strive to differentiate themselves in a challenging and crowded retail market. Customer expectations are changing. Today’s customers expect everything to be easy and seamless and right here, right now. Consequently, customer experience will become the new retail currency and experience per customer interaction will be the new critical retail metric to measure success.