What does the future hold for Nigeria’s retail industry?

Nigeria's retail industry has been grappling with challenges stemming from the economic recession that hit the country last year. As the economic landscape shifts and the country's fortunes change, the sector faces a pivotal moment that begs the question: what does the future hold for retail in Nigeria? Haresh Keswani, the Group Managing Director of the RT Group, shared insightful perspectives during an interview with CNBC Africa, shedding light on the strategies and obstacles facing the industry. Keswani emphasized the current decline in regional retail volumes while acknowledging some growth in value, attributing this dynamic to the currency devaluation experienced in the country. The fluctuation in the exchange rate, from 165 Naira to 500 Naira and then to the current 360-365 Naira, has had a significant impact on import costs and overall retail performance. Despite the challenges, Keswani underscored that the core opportunities in retail have not diminished, signaling potential for growth and development in the sector. One of the critical factors inhibiting the growth of retail in Nigeria is the impact on real estate and supply chain dynamics. The reluctance to invest in shopping malls due to existing challenges in rent collection from tenants and the disruption in supply chains due to foreign exchange shortages have created significant hurdles for the sector. Keswani highlighted the importance of real estate, human capital development, and supply chain optimization as key pillars for driving retail growth in the country. He stressed the need for a holistic approach that addresses these fundamental aspects to unlock the full potential of the retail industry in Nigeria. Amidst the debate on online versus brick-and-mortar retail, Keswani shed light on the unique challenges facing online retailers in Nigeria, where high return rates and economic viability pose significant barriers to success. While online retail offers convenience, the issue of product returns and profitability remains a notable concern in the Nigerian market. In contrast, brick-and-mortar retail provides a valuable experiential platform that resonates with Nigerian consumers' preferences and aspirations. Keswani highlighted the role of organized retail as a critical component in driving economic recovery and supporting local manufacturing and agriculture. He emphasized the need for government policies that recognize the pivotal role of retail in bridging the gap between production and consumption, advocating for a supportive framework that incentivizes investments and promotes growth in the sector. In addressing the challenges in the supply chain, Keswani called for collaboration with major brands and a focus on marketing new products to enhance consumer engagement and drive demand. The lack of capacity in marketing new brands and products, coupled with resistance from traditional middlemen, poses a significant obstacle that requires strategic interventions to overcome. Keswani reiterated the importance of organized retail as a key platform for growth and urged for enabling policies that foster entrepreneurship and innovation in the sector. Looking ahead, Keswani expressed optimism for the retail sector in Nigeria, citing the need for favorable government policies that incentivize investment and facilitate access to funding at affordable rates. He emphasized the importance of collaboration between industry players and the government to drive sustainable growth and development in the retail landscape. As Nigeria navigates the evolving economic landscape, the retail industry stands at a critical juncture where strategic initiatives and policy interventions can shape its trajectory and unlock its full potential.