TradeDepot, a B2B e-Commerce platform for consumer goods in Africa has released new insights from its market data that identifies the trends that will shape Nigeria’s retail sector in 2021.
According to TradeDepot’s report, the impact of the COVID-19 pandemic, rising inflation, border closures and other issues, drove significant changes in behaviour for retailers, distributors and manufacturers in 2020.
As the sector settles into the new year, TradeDepot predicts that some of the main trends that shaped 2020, particularly smaller packaging for consumer goods and increased spending on food and essential goods due to dwindling disposable income and people spending more time at home, will continue to influence behaviour across the market in 2021.
The top insights from TradeDepot’s data, which were drawn from 2020, would likely influence retail business in 2021, the e-commerce platform said.
It added: “Across the retail sector, the pandemic led to an increase in store owners exploring alternative channels of reaching, acquiring and servicing customers, especially online and social media. Demand for TradeDepot’s services increased by 500 per cent, with a 300 per cent increase in transaction value and volume on the back of the pandemic.
“Consumer buying patterns shifted slightly towards more food items, with growth in purchase of food and essentials as opposed to other categories. TradeDepot’s data revealed a 10 per cent increase in the overall contribution of food items to the distribution volumes, compared with 2019.
“In the drinks category, the lockdown impacted the ability of manufacturers and distributors to sell into bars, restaurants and clubs, which usually account for up to 60 per cent of their revenue. In the detergent category, price increases driven by inflation led many manufacturers to either introduce or expand production capacity for smaller packs to drive more volume in the consumer segment of the market, which accounts for 65 per cent of the market. The pandemic also saw the introduction of more hygiene-related products to help curtail the spread of the virus.”
Having listed 2020 trends, TradeDepot therefore predicted that for 2021, manufacturers would likely adapt to rising inflation and dwindling disposable income by extending the trend of smaller packs to other product categories.
It said manufacturers would explore more alternative route-to-market channels with capabilities to build retail networks and offer logistics-as-a-service to mitigate the risks that come with serving new customer bases
“We expect an increase in the number of challenger value brands and new market entrants offering lower priced products in key categories as consumers get increasingly price conscious and more eager to experiment with new, lower-priced products.
We also anticipate a rise in products and services designed to help consolidate and improve the industry.
“With the pandemic still ongoing, we envisage that people will continue to take a cautious approach to mingling in crowds and will spend more time at home than in previous years, As a result, spending on food and essential goods is likely to increase,” TradeDeposit said in its report.
The report however listed some of the challenges for 2021 to include: data aggregation, infrastructure and logistics, as well as access to funds.
It, however, said there had been some progress with financial services for consumers in recent years and potential for many of the learnings to be adapted for retailers
CEO and Co-founder of TradeDepot, Onyekachi Izukanne, said: “The retail sector is one of the strongest pillars of the Nigerian economy but the absence of data and verifiable insight often makes it difficult to assess the opportunities and challenges that abound in the space.
“The sector is also hampered by infrastructure and logistics issues that undermine the efforts of the industrious business owners. With some more support from government, public institutions and private sector players, there is the potential to transform the Nigerian retail market and achieve a quick win for boosting the nation’s GDP.”