Nigeria…Looking Good Economy is Democracy has become diversifying entrenched and civil Sl eek … society strengthenedStrong growth inCommunications andTransport sectors Population is benefiting with higherSound economic disposablemanagement has created incomestrong and stable growth,partly supported by highoil price 2
Population offers a large & richer consumer base The Nigeria Consumer is growing in number .......and in purchasing ability Nigeria Population 2005 - 2011 GDP per Capita(PPP) 2005 -2010 160,000,000 3000 140,000,000 120,000,000 2500Number of Person 100,000,000 2000 80,000,000 Dollars 1500 60,000,000 40,000,000 1000 20,000,000 500 0 2005 2006 2007 2008 2009 2010 2011 0 Year 2005 2006 2007 2008 2009 2010 Year • Trade activities are geared towards putting goods in the hand of the consumer • The more the number of consumers, the better for all parties on the chain – the producers, wholesalers, retailers. • In Nigeria, the population is growing, increasing the size of the consumer with increase also in purchasing ability. • Per capita income has moved from $1,400 (2005) to $2,500 (2010) Growth prospects for trade activities are bright 3
Nigerian Demographics powers its growing Economy and Trade 0-14 years (Dependent age) 15-64 years (Independent ) This age range represent 40% of Nigeria’s At present bulk of the Nigeria’s 150Million population and a huge number of potential population is within this age range and they parents, producers and latent consumers. account for 55% of the Nigerian population. They fall within the dependent age group. They have the lowest amount of They have the highest amount of disposable disposable income. income. 60 and above years This age range is characterized as the The above range constitute 5% of the independent age whose taste akin to western population With an overall population growth rate of taste and as such they are heavy spenders 2.4%. This implies there will be a constant influx of new people to replace this aged and consumers. population. They are also the decision making units (DMU) This will be further aided by declining mortality rates and increasing fertility rates. in families. Improving healthcare services imply that even this group will live longer and will continue to They are concentrated in the major cities in be active economic decision makers. Nigeria. The most affluent of this demographic group T he population distributions of Nigeria signifies a latent consumer nat ion wait ing t o be t apped. reside in Lagos and are the biggest attraction 4 for traders.
The increase in the Purchasing power of Nigerians is most felt inthe BCG section of our economy. Mobile Telephony (GSM, CDMA) The Nigerian film movie industry (Nollywood)•Nigeria is rated as the fastest growing GSM market in the •It is estimated as a N30 Billion industry and the third largest in the worldworld and the largest in Africa which churns out an average of 50 movies in a week.•With teledensity rate of 0.48% in 2000, a suppressed •Nigerian film industry has emerged as the fastest growing sector in thedemand pushed this up by 350% within nine months ofthe inception of the GSM. Nigerian economy within the past five years with an average growth rate of•At present industry size is about N1.5 Trillion with an 20% and contributing N1.2 Billion to the national economyaverage annual growth rate of 50% •Movies come as VCDs and are sold for less than 2 dollars on the streets•GSM users spend 7-22% of household incomes on •The average movie sells about 50,000 copies but a hit movie will sellcommunication expenditure and they seem pleased to. hundred of thousand of copies The Food Industry •The explosion that has been experienced in the fast-food industry is an indication of the increase in the spending pattern of Nigerians and also the availability of more disposable income. •The changing cultural attitude that accepts ‘outside-the-home’ dining experience as a desirable statement of class. 5
BCG sector is driven by the tenacity of the Middle class and BOP to consume A Bottom of the Pyramid (BOP) Analysis of Nigeria The BOP though with a low purchasing power contributes to the growth of the BCG sector with their sheer size and passion to consume upscale goods
Nigeria in 2025 A Huge Market of Traders and Consumers• Urbanisation is likely to continue.• Infrastructural and other social services cost will be greater.• However concentrated consumers promotes trade efficiency.• Mall can be open 24hours to allow off-peak shopping• Cheaper than transporting goods, even at night, to rural areas. From 8th most populous to 7th most populous country of 206m in 2025. More of them living in cities.
Nigeria in 2025Nigeria may become 1 of top 20 economies in 2025 Growth Projection for 2025Growth Prospects •GDP to reach $445b and•Goldman Sachs, as a follow-up to its BRICs concept, came up, late in 2005, •Per capita GDP of $2,161with the idea of Next Eleven (N-11). GS wanted to identify those countries Growth Projection for 2050that could potentially have a BRIC-like impact in rivalling the G7 (G6 + •Nigeria could overtake some G7 countries by 2050Canada).These were the next set of large-population countries beyond the withBRICs. •GDP of $4.6Tr•The N-11 countries are Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico,NIGERIA, Pakistan, Philippines, Turkey and Vietnam. They are unlikely to Within the expanded BRIC and N-11 group, Nigeria’srival the BRICs as a grouping in scale, but they could reach two-thirds the income per head places her within the bottomsize of the G7 by 2050. quartile. This the low-income (below $20,000) group.•All of the N-11 have the capacity to grow at 4% or more over the next 20 Her companions are Pakistan and Bangladesh.years, if they can maintain stable conditions for growth. However, Nigeria’s income is projected to be more than twice that of the other two countries.
The Dynamics of Lagos is a single major contributing factor to thesuccess of the Nigerian Economic Space ABA Key indicators 9
Lagos continues to experience massive population growth
A new wave of consumers emerges from the growth & increasingspecialisation of Lagos Entrepreneurs who have seized on the increasingly liberal regulatory environment to set up new businesses or to own New Industry A and restructure erstwhile privatized government Captains establishment. Finance, Telecoms, Manufacturing, Energy, Entertainment & Leisure sectors of the economy have been major beneficiaries Distinctive & B Mostly paid employees at major sector of the economy. Their sheer increase has led to the sprawling growth of residential Growing Upper Class estates (e.g. along Lagos-Epe expressway) Generally, these are low/middle level management employees A burgeoning & Aspiring C in the growth sector of the economy. Powered by well-paying jobs and easy access to credit, this class fuels a growing trend Middle Class of consumption across board-goods, entertainment & leisure services etc A Large Poor Base D&E Very low capital income but they are not left out of this growing consumption trend. The high proportion of this segment still causes attraction as a consumer segment for many products. Slowly but surely, improvement in Lagos has empowered more consumers of BCG 12
Geographical attributes: Lagos The old Lagos, the Hub of Lagos, crowded, bustling andLagos Sate is categorized as 95% characterized with traffic jams. The central business districts areUrban populations located here. Mostly occupied by the middle class and BOP with few upper class citizen remaining there. The newest Lagos, the site of model The new Lagos, development is now concentrated energy city. Undergoing restructuring like here with middle and upper class-styled estate road widening, solid railway infrastructure coming up at high rate. A mostly residential area etc. The future of Lagos may lie here. and an export free trade zone is planned here
Categorizing the NeedMajor Markets District Markets Final Markets Consumer
High Achilles Heel Competitive Advantage •Lack of consistent Quality Assurance •Allows for fake products/imitation •Bulk purchasing possible •Breeds crime-thieves, pickpockets •Competitive prices e.t.c •Effective if not efficient •Unhygienic distributive system. •Encourages waste due to poor storage. Advantage Non-Critical Advantage Regular Competences Provided •Markets well positioned •High turnover and easily accessible to all •Merchandising and sundryLOW LOW Leverage Opportunity High
HighNeat Neighbourhood Shop•Emphasise location near the customer and flexible Competitive Advantage Achilles Heelopening hours.•The prices are higher than in most other formats. •Not easily accessible to •Neater & healthier• The store site is usually small. majority of the shopping experience. population •Makes shopping a leisure Dist rict Supermarket •Competitive pricing •Have a wide assortment and often also good service and quality of products. •They emphasise the ease of finding all the products in one place, i.e. one-stop shopping. •Some supermarkets are located in centres of Advantage Non-Critical Advantage Regular Competences population while some are located outside of them Provided in a place that is easily reached by car. • Small supermarkets have a size of 400-999m2, large ones over 1000m2.Malls•These are large multi-store shopping centres.•They cater for a variety of needs as the smallaccommodate a large number of shops selling a widevariety of goods within an attractive setting. LOW•The shopping mall is basically a shopping complex Leverage Opportunityenabling busy middle class shoppers to minimise LOW Highshopping time.
New trade practices in Lagos portends opportunities for any investor(1) From Pop and Mom Stores….to formal trade channel New Forms of Ret ailing are Emerging Bet t er Ret ailing Mix Neighbourhood St ores •A neighbourhood store is a scaled-up version of a neighbourhood shop or kiosk. It offers more variety of goods and opportunity for social interaction. It is likely to pay more attention to ambience and employ more independent staff than a kiosk or a hop run by a householder. A neighbourhood store typically offers little self service facilities. Shops do not normally give receipts. Supermarket •A supermarket is normally a departmental store with goods arranged according to similarities. The shopper will be able to find his way around the store and pick the goods of his choice with minimal assistance. Supermarkets often offer time-stamped receipts for goods and they are often more conscious of expiry dates of their goods. They have large overhead as they spend a lot on power as, unlike stores, supermarkets must be well lit for customer to be able to shop unaided. Supermarket employees normally wear uniforms which may denote ranks. They tend to enhance margins by buying directly (“ direct sales” ) from manufacturers and importers.
New trade practices in Lagos portends opportunities for any investor(2) From Pop and Mom Stores….to formal trade channel New Forms of Retailing are Emerging Shopping as a Pleasure Shopping Malls •These are large multi-store shopping centres. They cater for a variety of needs as the small accommodate a large number of shops selling a wide variety of goods within an attractive setting. The shopping mall is basically a shopping complex enabling busy middle class shoppers to minimise shopping time. The risks of mugging and pickpockets are reduced compared to market shopping. City Mall and Palm are examples. Online Shopping •Online shopping is convenient and can be done at anytime of the day. Although, the physical social interaction with fellow human is lacking, the online community has its own equivalent of fellow shoppers who are willing to chat, help with selections, tips on bargains, rating of sellers and so on. Office Ret ailing •Office is a form of sophisticated hawking. The retailer arranges to meet somebody in his office to show him the trade items. The retailer often gets the person who invites him to his office to encourage his colleagues to drop in to his office to take a look at the wares being showcased. This is very convenient fort people who do not have the time to spend on visits to markets or even malls. The malls may lack variety and are impersonal. Office shopping make it easier to haggle and gets customised service. Indeed, it has become a way of shopping for mobile phones, clothes, books. Some of the retailers even come to the offices with textile materials and tape rule to take measurements.
Though other pleasurable retail delivery system exist they are not alsoaccessible to the majority of Lagosian OPIC Plaza Shoprite Shopping Mall Shoprite Shopping Mall Park & Shop; Mega Plaza Ozone Mall Palms Shopping Mall They do not also offer the a good mix of Nigerian foodstuffs and household goods at the affordable
What is the opportunity?Socio-economic Characteristics Occupation/ Taste and Preferences Classification (types of dwelling and Job Status sophistication) •Exclusive government areas •Senior management position •Desire and can afford an •Government reservation areas •Top expatriates upscale shopping experience. A •Low density areas •Large business owners •Most of shopping is done in available western styled malls, •Whole house, uses exotic cars and •Top professionals (Upper Class) supermarket/hypermarket. have all conceivable electronics •Ministers, commissioners •Use house helps for shopping •Several servants and house helps •Senior military officers at local markets •(colonel & above) •Almost like the A-class but with less •Intermediate management in •Desire and can afford an no. of numbers of rooms and possibly large companies upscale shopping experience. in fringes of exclusive areas •Senior management/directors in •Most of shopping is done in B •In high rise flats in executive areas small companies, top professionals available western styled malls, supermarket/hypermarket.(Lower Upper Class) •Directors in public services •Use house helps for shopping •Military officers of the rank of at local markets captain to Lt. Colonel •Lives mainly in medium density areas, •Senor civil servants level 12 or •Desire and can afford an may also live in choice house and some above, some well employed upscale shopping experience. C in high density areas educated graduates, most lecturers, small business owners •The also frequent the popular •Have at least one car, cable TV, local markets (Middle Class) considerable no. of house hold electronics •Live mainly in room & parlour or face- •Skilled or semi-skilled workers, •Desire and but cant afford an me-I-face-you petty traders, male teachers, upscale shopping experience. DE •Highly congested areas or urban students from low income •They the bulk of their shopping (Lower Class) surburbs families at the local popular markets 21
Market Share Analysis:Grounds upFood Consumption, a National view High Estimated Market Size Value of Total Food Consumption 2010 % QSR and FSR (service component of food consumption) $126B 2011est. -5% $120B 2011est. Source : Nigeria Bureau of Statistic 2010 % food consumed in Agriculture % Agriculture in GDP Nigerias GDP Figure component of GDP 39.49% 0.80% $194B 2011est. $88B 2011est. % Wholesale & Retail Trade in % food consumption in wholesale GDP & retail trade in GDP 19.87% 0.6% Source: WWW.TRADINGECONOMICS.COM -| IMF Imported Processed Food including grains Retail Food Import Into Nigeria 10.0% Local unprocessed Food $900M 2011est. 85.5% Source: Steady Growth of Nigerias Retail Food Sector 2011, USDA GAIN report Local Processed Food $6B 2011est. 4% Others 0.5% Low
The Retailing of Foodstuff and Household good in Nigeria is a~$120Billion 2011 est. max. Industry consisting of the Food Processing and Basic Consumer Goods Industry.- With 6 Broad Categories, ~ 20 Segments and Further Sub-segments Snacks , Poultry, pork, Noodles & Salt 8% Fruit Juice Pasta 11% Cheese/ Personal Care Games etc. 10% 18% 17% Butter Goat & 18% Lamb Pasta 16% Edible Oils 22% 19% Pharmaceuticals 19% Yoghurt, Ice Cream Fish Bread 40% Beverages 32% 26% Soft Drinks 89% 25% Vegetables 80% Beef Milk Flour 42% Sugar 42% 43% 38% Meat & Meat Product Fruit, Vegetable & Grains & Grains Milk etc Basic Consumer Goods Oils Products Sales in N’million Source: Industry DataHowever, our presentation is concerned with the final retail delivery segment
Market Share Analysis: Lagos Analysis Average Density in Estimated Food Industry Assuming our Mall serves size in Nigeria Metropolitan Lagos is an area of 10 sq. km 20,000 person per sq. km $120B % Consumption in Lagos Assuming an Average Source: Nigeria Bureau of Statistic family size 4 persons 9% 2010 Consumption Report Estimated Food Industry Implies 50, 000 Size in Lagos households between a 10 square km range ~$10BAssuming a consumption Consumption period of 50 pattern of N2,500 per weeks in a year Target Market $417 week i.e.$17 per week million which is equivalent ~4.33% Revenue accruable will be $417 million
Zeroing in on our Target Market $120 Billion The available Food market in Nigeria spanning over 36 states. $10 BillionOur Initial servedFood market in Lagos $417 Million Our target market serving households living within 10 sq. km of the Mall