2. Nigeria…Looking Good
Economy is Democracy
has become
diversifying entrenched
and civil
Sl eek …
society
strengthened
Strong growth in
Communications and
Transport sectors
Population is
benefiting with
higher
Sound economic disposable
management has created income
strong and stable growth,
partly supported by high
oil price
2
3. 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 2500
Number 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
4. 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.
They fall within the dependent age group. account for 55% of the Nigerian population.
They have the lowest amount of They have the highest amount of disposable
disposable income.
income.
60 and above years
The above range constitute 5% of the This age range is characterized as the
population
independent age whose taste akin to western
With an overall population growth rate of
2.4%. This implies there will be a constant taste and as such they are heavy spenders
influx of new people to replace this aged
population. and consumers.
This will be further aided by declining mortality
rates and increasing fertility rates. They are also the decision making units (DMU)
Improving healthcare services imply that even
this group will live longer and will continue to in families.
be active economic decision makers.
They are concentrated in the major cities in
Nigeria.
T he population distributions of Nigeria signifies a latent consumer nat ion wait ing t o be t apped.
The most affluent of this demographic group
4
5. The increase in the Purchasing power of Nigerians is most felt in
the 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 world
world 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 the
demand pushed this up by 350% within nine months of
the 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 economy
average 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 sell
communication 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
6. 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
7. 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.
8. Nigeria in 2025
Nigeria may become 1 of top 20 economies in 2025
Growth Projection for 2025
Growth 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 $2,161
with the idea of Next Eleven (N-11). GS wanted to identify those countries Growth Projection for 2050
that could potentially have a BRIC-like impact in rivalling the G7 (G6 + •Nigeria could overtake some G7 countries by 2050
Canada).These were the next set of large-population countries beyond the with
BRICs. •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’s
rival the BRICs as a grouping in scale, but they could reach two-thirds the income per head places her within the bottom
size 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.
9. The Dynamics of Lagos is a single major contributing factor to the
success of the Nigerian Economic Space
ABA
Key indicators
9
12. A new wave of consumers emerges from the growth & increasing
specialisation 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
13. Geographical attributes: Lagos
The old Lagos, the Hub of Lagos, crowded, bustling and
Lagos Sate is categorized as 95% characterized with traffic jams. The central business districts are
Urban 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
16. 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 sundry
LOW
LOW Leverage Opportunity High
17. High
Neat Neighbourhood Shop
•Emphasise location near the customer and flexible Competitive Advantage
Achilles' Heel
opening 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 small
accommodate a large number of shops selling a wide
variety of goods within an attractive setting. LOW
•The shopping mall is basically a shopping complex Leverage Opportunity
enabling busy middle class shoppers to minimise
LOW High
shopping time.
18. 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.
19. 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.
20. Though other pleasurable retail delivery system exist they are not also
accessible 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
21. 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
23. Market Share Analysis:Grounds up
Food 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
Nigeria's GDP Figure component of GDP
39.49% 80%
$194B 2011est. $88B 2011est.
% Wholesale & Retail Trade in % food consumption in wholesale
GDP & retail trade in GDP
19.87% 60%
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 Nigeria's Retail Food
Sector 2011, USDA GAIN report
Local Processed Food
$9B 2011est.
4%
Others
0.5% Low
24. 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 Data
However, our presentation is concerned with the final retail delivery segment
25. 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 ~$10B
Assuming 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
26. Zeroing in on our Target Market
$120 Billion
The available Food market in
Nigeria spanning over 36
states.
$10 Billion
Our Initial served
Food market in Lagos
$417 Million
Our target market serving
households living within 10
sq. km of the Mall
