Nigeria’s global ranking in retail development dropped from the 19th position recorded in 2016 to 27 out of 30 countries surveyed in 2017.
Total national sales from the sector also dropped from $125 billion in 2016 to $109bn in 2017, according to the Global Retail Development Index, which measures retail investments based on all relevant macroeconomic and retail-specific variables in developing countries.
The GRDI carried out by A. T. Kearney, a global management consulting firm, stated that Nigeria faced some serious challenges, including lower oil prices, security threats and corruption in the period under review, and these overshadowed its rapid growth. It noted, “Africa’s economic expansion of the past decade was fuelled by the commodities boom and increasing industrial activity. However, with falling commodity prices, African oil exporters face serious challenges from depreciating currencies, corruption, and deep cuts in government spending.
“In many ways, Nigeria symbolises this reality. Uncertainty now hangs over the prospects in this West African nation, and its country risk has increased. Overall, Nigeria presents immediate challenges, yet its large population, growing middle class, and long-term potential keep it on the radar.”
The GRDI had in the 2016 report stated that Nigeria’s retail development was supported by a middle class that had grown by 600 per cent in the last few years and included 4.1 million households, or 11 per cent of the country’s total population.
It added that despite the economic growth being tempered by low oil prices, constrained government expenditure and consumer spending, which took a hit in 2015, plummeting nine per cent as inflation made consumers more careful with their shopping, Nigeria still offered global retailers many opportunities.
Despite the negative rating in the 2017 index, the report stated that the industry still had lots of potential.
The report stated, “Two trends stand out. The first is the development of shopping centres where Nigerians are slowly shifting to the modern shopping experience. Although mall development has slowed from its rapid growth over the past few years, new developments have not been shelved.
“The second is the increasing importance of e-commerce. Given its size, Nigeria remains an attractive destination for e-commerce companies, with online retail expected to grow at a double-digit rate through 2020. An estimated 53 per cent of Nigerians access the Internet, and mobile shopping is growing rapidly.
“Jumia, the country’s largest e-commerce company, estimates that 63 per cent of its customer orders are placed via mobile. Although online growth is hampered by limited logistics and payments infrastructure, new entrants are attracted to the growing market knowing these barriers will be overcome over time.”
An estate surveyor and valuer, Rogba Orimalade, said in 2017, there was a standstill in the expansion of retail development due to government policies, which had negative impact on the industry.
Orimalade, who is the Chairman, Lagos branch of the Nigerian Institution of Estate Surveyors and Valuers, stated that there was an all-round negativity in the industry in 2017.
He said, “Apart from Shoprite and other anchor tenants, others were affected and this impacted their bottom line. Cinemas, for instance, invested millions on equipment but could not increase prices of tickets because of low purchasing power.
“So, whether in investment or the number of malls coming in, or revenue being generated, it was negative to a large extent. A lot of investors and retailers only managed to find all kinds of cost-saving measures to stay afloat.”
He is, however, optimistic that this year will be better.
“There will be positive turnaround this year because it a political year; the government will spend more; retailers will be encouraged to come in and the liquidity in the system will prompt more sales,” he added.