Doing business in the fashion industry in nigeria

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Doing business in the fashion industry in nigeria

  1. 1. DOING BUSINESS IN NIGERIA MAFED 2013 CLASS PRESENTATION BY OROMA COOKEY-GAM Thursday, September 5, 2013
  2. 2. NIGERIA: COUNTRY OVERVIEW Nigeria is a federal republic with 36 states. It is situated in West Africa The country capital is Abuja but Lagos is the commercial hub Nigeria has a population of 174 million people (making it the largest country in Africa) and accounts for 47% of the population of West- Africa Nigeria’s population is made up of about 200 ethnic groups, 500 indigenous languages, and two major religions ― Islam and Christianity The national language in Nigeria is English Nigeria is the biggest oil exporter in Africa, with the largest natural gas reserves in the continent Nigeria is the richest country in Sub-Saharan africa and has the second most developed fashion industry in the region. The Nigerian economy has grown by 6% for the last 7 years mainly as a result of its booming oil sector Nigeria is also very important for its entertainment industry- music and film (nollywood) Thursday, September 5, 2013
  3. 3. FOREIGN DIRECT INVESTMENT IN NIGERIA Entry strategy is usually by Foreign Direct Investment FDI in the fashion industry in Nigeria is vertical- distribution only Method is usually by incorporating a wholly owned subsidiary company or could also be by joint ventures with a Nigerian company. Nigeria receives the largest amount of Foreign Direct Investment in Africa (approx $7bn in 2013) mainly due to its booming oil sector In 2009 Nigeria’s FDI reached $11bn making Nigeria the 19th highest recipient of FDI in the world The main sources of Foreign Direct Investment in Nigeria are the home countries of oil majors such as Exxon Mobil, Chevron Texaco and Shell. Sectors with major FDI inflows over the years have been the oil and gas, manufacturing, infrastructure development, services and consumer goods sectors In Nigeria, 100% foreign ownership is allowed in all industries except in the oil and gas industry. However for convenience and ease of doing business international investors in most industries choose to have a local partner. (e.g Zegna, Hugo Boss in fashion Thursday, September 5, 2013
  4. 4. NIGERIAN FASHION INDUSTY: THE CUSTOMER PROFILE (DEMAND) DEMOGRAPHICS Huge Population Customer concentration in 2 or 3 main cities Customers are both male and female No age limitations- Baby boomers**, Generation X* and Y Rise of the emerging middle class who earn decent salaries and have decent disposal incomes. Service sector boom resulting in an emerging middle class with increased spending power Spending power of the upper class extremely high mainly due to wealth from oil and gas and politics BEHAVIORAL PATTERNS AND BENEFITS Very fashion conscious people Materialistic- product/brand focused as opposed to service- buy into brands for a sense of belonging and for social status Exposure and increased awareness of fashion due to advancements in technology and entertainment Increased interest in fashion as a result of local brands kicking off the industry Well travelled and aware of international brands Culture plays a significant role in the buying habits of Nigerians- ‘Event-attending‘ society Thursday, September 5, 2013
  5. 5. NIGERIAN FASHION INDUSTRY: ! KEY COMPETITORS https://www.youtube.com/watch?v=rlwFiJiZ_tM Price/Quality/Service/Image Indigenous Designer Brands Cut and Sew Tailor-made fashion Luxury Brands/ Ready-to-Wear/ Designer Diffusion/Upper Bridge Bridge Mass Brands INTERNATIONAL MARKET NIGERIAN MARKET Thursday, September 5, 2013
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  12. 12. NIGERIAN FASHION INDUSTRY: PRODUCTION AND DISTRIBUTION PRODUCTION Little opportunities for sourcing at this moment Almost no garment manufacturing capacities Historically a cotton producer Nigeria’s cotton, textile and garment (CTG) industry has been experiencing a downward trend over the last three decades CTG industry was a key player in the national economy in the 80s- employed 20% of population (600,000 workers) with 170 textile mills. Was ranked 2nd largest textile hub in sub- saharan africa CTG industry suffering as a result of poor infrastructure (energy), lack of technical manpower, smuggling of cheaper/lower quality textiles, high and uncompetitive cost of production Industry currently under reforms- $2bn investment in industry in 2012 DISTRIBUTION CUSTOMER SHOPPING PATTERNS Gradual shift from tailor-made fashion Growing retail culture in main cities Purchase is usually event-driven and not casual Preference is towards multi-brand shops or malls Tendency to buy international brands abroad during yearly vacations DISTRIBUTION OUTLETS No defined retail districts like in most developed nations Shopping malls becoming increasingly popular Retail outlets located arbitrarily- Zegna located on Commercial street, etc Underdeveloped in terms of actual retail experience International brands mainly available through multi-brand stores at extremely high prices. Boost in E-commerce Thursday, September 5, 2013
  13. 13. NIGERIAN FASHION INDUSTRY: TECHNOLOGICAL ADVANCEMENTS E-COMMERCE E- Commerce 2 years ago, non existent but has suddenly seen a recent boom- Jumia, Konga- Mass brands International companies now delivering to Nigeria- www.asos.com INTERNET Internet users increasing at extremely fast pace in the last 3 years as a result of smartphone and mobile data services. Fashion bloggers and Fashion websites becoming increasingly relevant in influencing opinions Indigenous brands using websites and blogs as a cheaper and more accessible method of reaching customers and providing information and customers becoming increasingly dependent on these websites. website: http://www.hautefashionafrica.com/ http://styljunki.com/ blog: http://www.onenigerianboy.com/ SOCIAL MEDIA Social Media mainly used to promote brands as in developed countries. Instagram, Facebook and Twitter Extremely effective means of marketing as smart phones are now commonplace Thursday, September 5, 2013
  14. 14. ATTRACTIVENESS OF THE INDUSTRY PROS Attractive Investment Laws- NIPC Act- Incorporation, business permits, quota positions, tax and other incentives. Large Market High population of baby boomers Growing local fashion industry- fashion weeks, international press, etc Good returns on investment Lenient tax laws Lenient processes and regulations Low cost of labour and availability of skilled labour Timing- Early and therefore opportunity to gain brand loyalty and market share CONS Lack of infrastructure- electricity, bad roads, etc Risk of political instability Undeveloped retail structure Expensive properties in undefined retail districts Different culture- time perception, etc Relatively high standard of living KEY SUCCESS FACTORS A suitable and competent local partner Skilled sales force Good Location An strong understanding of the market and culture High brand perception and awareness in the eyes of the Nigerian Market Thursday, September 5, 2013
  15. 15. THANK YOU... GRAZIE... MERCI... IMELA... NA GODE... ESE... Thursday, September 5, 2013
  16. 16. TAIWO ABDULLAHI, DOING BUSINESS IN NIGERIA HTTP://WWW.WORLDBANK.ORG/EN/COUNTRY/NIGERIA/OVERVIEW HTTP://WWW.CORPORATE-NIGERIA.COM/ASSETS/PDF/2010/CN-2010-FDI.PDF UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT HTTP://UNCTAD.ORG/EN/PAGES/DIAE/WORLD%20INVESTMENT%20REPORT/ANNEX- TABLES.ASPX HTTP://LEADERSHIP.NG/NGA/ARTICLES/47914/2013/02/17/ REVIVING_NIGERIAS_AILING_TEXTILE_INDUSTRY.HTML HTTP://WWW.BUSINESSOFFASHION.COM/2013/06/MARKET-GPS-NIGERIA-TAKING-AFRICAS- GIANT-SERIOUSLY.HTML SOURCES Thursday, September 5, 2013

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