West Africa's retail penetration growth disappoint compared to S.A - Expert

Commercial property services company Brawl has highlighted the substantial gap in retail penetration between West Africa and South Africa, with West Africa falling below 5% while South Africa boasts an estimated 60%. To delve deeper into the outlook for retail in Nigeria, Jan Fanzell, the head of property development for Nigeria at Novari Equity Partners, sheds light on the current landscape and potential growth opportunities in the sector. Amidst economic challenges such as a tough economy and a dollar shortage, Fanzell remains optimistic about the future of retail in Nigeria. Despite the recession, Fanzell notes that there is an uptick in market retailers opening stores, showcasing resilience and adaptability in the face of adversity. Notably, several major retailers have recently set up shop in Novari Lakey Mall, including Kilimanjaro, Genesis, and international brands like Nike, Levi's, and Swatch. Fanzell emphasizes that the low level of retail penetration in Nigeria, at just 5%, presents a significant growth opportunity given the country's vast middle-class population and market potential. With a population of approximately 16 to 20 million in Lagos alone, there is a substantial untapped market for retailers to leverage. Fanzell believes that as the economy gradually recovers, the retail sector will only continue to expand and cater to a growing consumer base. When discussing the geographic focus of retail development, Fanzell highlights a dual approach, with some developers concentrating on major cities like Lagos, Abuja, and Portacort, while others are exploring opportunities in secondary cities. The sheer size of the Nigerian market allows for multiple players to coexist and thrive, offering diverse retail experiences to consumers across the country. In response to economic challenges such as foreign exchange shortages and subdued consumer demand, Fanzell notes a shift towards locally produced goods on retail shelves, signaling a positive trend towards self-sufficiency and reducing import dependence. While acknowledging the need for continued investment in infrastructure to bolster local manufacturing capabilities, Fanzell sees this as an opportunity for retailers to carve out a niche and differentiate themselves in the market. Looking ahead, Fanzell believes that the current recession could pave the way for the emergence of new local retailers who cater to niche markets and capitalize on the low market penetration in Nigeria. While some international brands have faced challenges and may have exited the market due to the forex crisis, Fanzell stresses the importance of understanding the unique dynamics of the Nigerian market and adapting business strategies accordingly. Ultimately, Fanzell remains optimistic about the long-term prospects of retail development in Nigeria, citing the resilience of retailers and the vast opportunities that the market offers for both local and international players.