Riding on the forecast of the International Monetary Fund (IMF) where Nigeria economy has been projected to grow at two per cent in 2019, experts in the retail space have said that they are expecting a minimal growth in the sector in the year.
This is as activities in the economy are expected to shape the sector’s movement and consumers behaviour in general.
Guest Speaker at a retail roundtable organised by Bervidson Group, Dr. Doyin Salami, noted that actions in the industry would be determined by trends in polity, price conditions, employment, income, purchasing power, spending patterns, credit and demographic conditions.
Salami explained that while global economy confronts a weaker outlook in 2019, the country’s performance would be hinged on its policies, diaspora transfers, capital flows and trade, all of which will take effect on retail direction.
Reacting to the result of a recent study undertaken in Lagos, Kano and Rivers states, he concluded that there had been a total change in consumers purchasing pattern.
“Prior to recession, consumers expressed preference for luxury items, but they have since switched their purchasing lifestyle to products that meets their immediate needs.
“Today’s consumers have migrated to value brands from premium brand, embrace re-sizing and bulk-breaking and choose to patronise channels that offer shopping convenience which could be malls, open market and online platforms.”
He further identified tight credit conditions a major condition that would rub off negatively on the sector’s performance this year.
“Credit markets are not set fair for consumers. Consumer credit is not identified as one of the distinct categories into which the Central Bank of Nigeria classifies lending by commercial banks, this suggests a negligible component of bank balance sheets.”
President of Bervidson Group, Joseph Ebata, urged government to prioritise the sector and see it as a critical factor of economic life.
In his review of the sector, he said, “For this year, we expect to see minimal growth in the sector and this will be determined by activities in the economy.IMF projection stands at two per cent, it is expected that some sectors will perform above and below the figure. For the retail unit, happenings in the global scene would also reflect in the domestic market, but if the pace of slow growth in Nigeria continues, then it’s going to be a mixed bag basket for operators, in other words, we should expect a mixed revenue growth.”
He noted that challenges such as power, supply chain, multiple taxations, access to funds and many more have been limiting productivity in the sector.
“If we can fix energy, improve on infrastructure, capacity building, then it will be great for us. You can imagine that every retailer build his own power infrastructure, this is a major cost and drain in business, if the roads are fixed, it will ease transportation and logistics, then we can have pull back of resources and plough it back into core operations of the business.”