The President/ Chief Executive Officer of Bervidson Retail Group and Convener of ‘The Retail Leaders Conference,’ Mr. Joseph Ebata in this exclusive interview with OLUWAGBENGA BANKOLE speaks on the contribution of retail industry to Nigeria’s economy, challenges of the industry, how government can transforms the industry and many more. Excerpt!
As a veteran in the retail segment of the economy, how would you assess the retail industry in Nigeria?
Nigeria is a retailer’s delight. The Retail industry in Nigeria is evolving (as in most emerging economies) into the key driver and enabler of Growth. Modern trade has remerged and grown by 12.5 CAGR over the last 15 years up to 2014. The industry is transforming and many factors are fuelling this. The factors are the growth in middle class, development in urban centres, the coming of international, the development of malls, government policies particularly cashless policy and ban on street trading. Others are modernisation of open markets to ultra-modern markets, and introduction of international best practice retail industry specific training which we pioneered in the country
What has being the greatest problem of the industry?
The greatest problem of the industry has been regulatory and trading barriers, under development in infrastructure, limited access to retail real estate, limited shopper/consumer insights, limited talent pipeline, shortage of adequately skilled manpower, inadequate access to finance, cash flow and liquidity challenges and poor business structure. Other challenges are poor adherence to international best practices, supply chain and logistic challenges, low and unexploited synergy between retail and made in Nigeria goods.
Looking at the current state of the economy in Nigeria, how has it affected the retail industry?
Retail has been the worst hit by the current tightness in the financial industry and the high exchange rate. For most retailers it’s been a battle of survival with many retailers taking drastic measures to ensure their survival such as cutting cost – labour, reducing store footprint, limiting product SKUs, and tightening up supply chains. Some simply adopted a wait and see attitude and many have closed down. It has been a challenging and tough time for retail businesses.
Do you think the retail industry in Nigeria is getting enough support from Banks?
The temptation would be to say no…
As a former Banker, I would say that both retailers and Bankers should engage each other more. Bankers must develop a new mind-set borne out of a thorough understanding of the issues, challenges and opportunities in retail. They must understand the KPIs critical to retail success, how to measure and use in loan assessment. They must be willing to invest in capacity building for retailers that will in turn enhance the ability of retailers to conduct success business operation based on best practices. The bank that is willing to make this investment will ultimately become the bride of the retail industry.
Retailers on the other hand must engage banks with well thought through demand. They must be willing to invest in themselves and employees to understand what banks are looking for to become comfortable when supporting the retailer. The lip service of being a retail bank must give way to reality.
Joseph Ebata – President, Bervidson Retail Group
How can the present administration transform the retail industry in Nigeria and what policies do you think they should put in place?
We should have a vision and a strategy that is retail centric. There is a need for policy that would unlock funding for the retail industry. For instance we have so much locked up in pension funds of about N5 trillion. How can we make it accessible to retail?
Government needs to formulate some policies in order for retail segment in Nigeria to fulfill its potentials. Policy that will include retail business studies in our tertiary institution’s curriculum, policy that will improve clearing of goods from the ports, policies that will eradicate multiple taxation, policy on land use reforms to make real estate more accessible to retailers, policies on ease of doing business in Nigeria for foreign investors and policies that will support retail to promote the buy made-in-Nigeria goods
As a group, Bervidson will continue to galvanise support for the retail industry from all stakeholders, particularly the government.
The reason is simple…. the potential of retail is huge… from contribution to GDP, to employment for example.
The main point is that when everything boils down to the basics, the volume and momentum of trade is the engine of economic growth. At the core of trade, and as the ultimate point of value exchange is retail.
Globally, Retails plays a dual role as a key driver and as a catalyst of world economic growth. As a driver, it contributes $19 trillion to global GDP, representing 27% of global output and employs more than 17% of the global workforce. As a catalyst, it is the point where supply meets demand, and it is how goods and service reach the final point of exchange.
As Nigeria actively drives the diversification of the economy, Retail is driving urban regeneration with ultra- modern international mall springing forth in all Key Cities of Nigeria. With leisure and social opportunities, the Nigerian Retail landscape is evolving to provide lifestyle options that drives economic velocity and leads to urban transformation
Retail contributes 16-18% of Nigeria’s GDP with a size of $38.8 Billion in 2010 and the 3rd leading contributor to GDP (after Agriculture, Forestry and Fishing, and Mining and Quarrying). It attracted investment of N205.4bn ($1.3bn) between 2014 and 2015, growing at a CAGR of 14% and it contributes about 7% to national employment in Nigeria. When compared with retail’s contribution to Global employment of more than 17%, it clearly shows the huge potential of retail to support government’s effort in solving the county’s unemployment challenge in the country.
According to the 2016 AT Kearney Global Retail Development Index, despite country’s economic recession, Nigeria Retail sector ranked 19th in the world and 3rd in Africa out of the 30 top developing countries for retail investment in the world, based on all relevant macroeconomic and retail-specific variable, grossing a total national sale of N38tn ($125bn) in 2016.
However, Retail is dealing many challenges; from dearth of talents, high cost of real estate, institutional and policy issues, government regulations, multiple taxation, inadequate access to finance…..
More recently, retail is worse hit by the tightness in the financial industry and foreign exchange challenges…. If the industry must survive and thrive to play the role of a key driver of national economic growth – GDP, Employment, the current arrangement must change.
Our goal therefore is to continue to draw the attention of stakeholders to key issues and challenges in retail, address them and adopt solutions to set retail on the journey to fulfilling its potentials.
What advice would you give to young people who are aspiring to be retailers in the future?
Retail is a noble profession. See it as such. It is not for those who couldn’t find a paid job. Given the breadth of a retail business, strategic clarity is very important. Why are you going into a retail business? What strategy should you adopt? What is your USP? Think customer… Think value for customer…. Serve the customer. Your success lies in thinking about your business today and the future of your retail business through the lens of the customer. This is your sure route to success.