Economy
How Tough Market Conditions Reset Nigerian Shopping Patterns—Report
By Modupe Gbadeyanka
A new report from Nielsen titled ‘Navigating the New Normal in Nigeria’ has identified how tough market conditions in Nigeria altered the shopping pattern of residents in the Africa’s most populous nation.
The report noted that consumers, due to these challenging macro-economic forces, have dumped unnecessary products for immediate consumption needs.
“Spend has been diverted away from discretionary categories like Confectionery (snacks and sweets) and Personal Care (Health and Beauty) products to essential food and commodities, to make ends meet,” Managing Director of Nielsen East & West Africa, Mr Abhik Gupta was quoted as saying in a statement made available to Business Post by the firm.
However, Mr Gupta stressed that “Despite the flux experienced over the last year, Nigeria’s economy is set to rebound and grow at 1.2 percent according to the International Monetary Fund and consumer sentiment remains positive into the future.”
“In addition, despite overall spend declining through to Q2, 2016, it has now recovered over the last three quarters due to stabilising market conditions and inflation.
“Against this backdrop, manufacturers and retailers wanting to survive the current consumer shift and return to previous consumption levels need to understand what is critical to the wallet and what has changed in the shopping and buying dynamics to match their offerings to altered consumer realities,” he added.
Location loyalty
With tougher market conditions and despite a large repertoire of general and specialist channels, smaller, informal format stores have captured more spend away from their bigger Supermarket/Grocer counterparts. Open Markets, Kiosks and Table Tops have gained share of consumer spend (42%, up from 38% two years ago) as they offer greater flexibility in quantities, packaging and pricing, and are conveniently located near home or on commuter routes.
Nigerians are also less likely to travel to another store when a brand is unavailable or out of stock. Store loyalty trumps brand loyalty, as only 31% of consumers will visit another store but 68% report buying a substitute brand.
Against this backdrop, the risk for retailers is that as they are no longer able to maintain costs tied up in higher inventory levels and wider product assortment ranges, this has led to fewer categories being stocked and higher out of stock levels. With irregular supply and demand, consumers may be compelled to look elsewhere if they are unable to find a substitute product and the retailer will risk losing a valuable sale.
In this challenging environment, Nigerian consumers have also been less willing to try new products, resulting in more risk-averse product choices rooted in familiarity and recommendation. Gupta comments; “New brand entrants will need to focus on the current consumer needs for reliable, affordable and available brands, but also provide differentiation, value and distinct quality propositions to succeed in the longer term.”
A digital opportunity knocks
The rapidly shifting retail dynamics in Nigeria have also led to a burgeoning omni-channel opportunity in e-retailing, fuelled by aspirant consumers. Even though online shopping penetration still lags bricks and mortar shopping habits; growing Mobile, Smartphone, Internet penetration and transacting is allowing e-commerce retailers to leapfrog conventional bricks and mortar development. Digital trends point to e-commerce rapidly gaining traction in durable and consumable categories, with Nigerians already spending as much as 61% on out of country e-retailers.
In light of this, retailers will need to reassess product portfolios to suit on and off line consumers’ needs and strengthen brand loyalty. Gupta advises; “A digital strategy should be incorporated from the outset to win in both the long and the short term, providing consumers with seamless retail experiences and access to products not otherwise widely available.
“Retailers have a lot of room to grow when it comes to unifying channels with consistent, yet unique experiences on well-executed mobile-apps, in-store engagement, in-the-moment coupons and virtual shopping lists that will empower consumers and give them more control over their shopping experience and potentially increasing retail sales” he adds.
What’s in store?
Looking ahead, Nigerian sentiment is likely to improve in 2017, providing much needed relief to manufacturers and retailers as consumers add items back into their repertoire. More discerning consumers will continue to rebalance their basket, looking for efficiencies in what, where and how they shop. Consumers will also aspire to better quality products, but require more flexibility in price and quantity to meet their altered circumstances.
Gupta says; “To avoid missing these vital sales, manufacturers need to match products (format and price) to places (stores), with optimal levels of distribution and supply; while retailers will need to manage optimal stock availability and product ranges to retain shoppers.”
By Dipo Olowookere
Investors at the Nigerian Exchange (NGX) Limited have continued to show excitement for the full-year earnings of companies on the exchange so far.
On Friday, Customs Street further appreciated by 1.01 per cent as more organization released their financial statements for the 2025 fiscal year.
During the session, traders continued their selective trading strategy, with the energy sector going up by 2.47 per cent at the close of business despite profit-taking in the banking counter, which saw its index down by 0.11 per cent.
Yesterday, the insurance space grew by 2.16 per cent, the industrial goods segment expanded by 1.70 per cent, and the consumer goods industry jumped by 0.42 per cent.
Consequently, the All-Share Index (ASI) increased by 1,722.13 points to 171,727.49 points from 170,005.36 points, and the market capitalisation soared by N1.106 trillion to N110.235 trillion from the N109.129 trillion it ended on Thursday.
Business Post reports that there were 59 appreciating stocks and 19 depreciating stocks on Friday, representing a positive market breadth index and strong investor sentiment.
The trio of Omatek, Deap Capital, and NAHCO gained 10.00 per cent each to sell for N2.64, N6.82, and N136.40 apiece, as Zichis and Austin Laz appreciated by 9.98 per cent each to close at N6.72 and N5.40, respectively.
Conversely, The Initiates depreciated by 9.74 per cent to N19.45, DAAR Communications slumped by 7.32 per cent to N1.90, United Capital crashed by 6.55 per cent to N18.55, Coronation Insurance lost 5.71 per cent to quote at N3.30, and First Holdco shrank by 5.53 per cent to N47.00.
The activity chart showed an improvement in the activity level, with the trading volume, value, and number of deals up by 33.77 per cent, 93.27 per cent, and 10.63 per cent, respectively.
This was because traders transacted 953.8 million shares worth N43.1 billion in 51,005 deals compared with the 713.0 million shares valued at N22.3 billion traded in 46,104 deals a day earlier.
Fidelity Bank was the most active with 92.4 million units sold for N1.8 billion, Chams transacted 69.2 million units valued at N310.9 million, Deap Capital exchanged 59.1 million units worth N382.7 million, Access Holdings traded 57.2 million units valued at N1.3 billion, and Tantalizers transacted 48.6 million units worth N228.2 million.
By Adedapo Adesanya
The value of the Naira contracted against the United States Dollar on Friday by 13 Kobo or 0.01 per cent to N1,366.19/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) from the previous day’s value of N1,366.06/$1.
According to data from the Central Bank of Nigeria (CBN), the Nigerian currency also depreciated against the Pound Sterling in the same market window yesterday by N2.37 to N1,857.75/£1 from the N1,855.38/£1 it was traded on Thursday, and further depleted against the Euro by 57 Kobo to close at N1,612.52/€1 versus the preceding session’s N1,611.95/€1.
In the same vein, the exchange rate for international transactions on the GTBank Naira card showed that the Naira lost N8 on the greenback yesterday to N1,383/$1 from the previous day’s N1,375/$1 and at the black market, the Nigerian currency maintained stability against the Dollar at N1,450/$1.
FX analysts anticipate this trend to persist, primarily influenced by increasing external reserves, renewed inflows of foreign portfolio investments, and a reduction in speculative demand.
In the short term, stability in the FX market is expected to continue, supported by policy interventions and improving market confidence.
Nigeria’s foreign reserves experienced an upward trajectory, increasing by $632.38 million within the week to $46.91 billion from $46.27 billion in the previous week.
The Dollar appreciation this week appears to be largely technical, serving as a correction to the substantial losses experienced from mid- to late January.
Meanwhile, the cryptocurrency market slightly appreciated, with Bitcoin (BTC) climbing near $68,000, up nearly 5 per cent since hitting $60,000 late on Thursday after investor confidence in crypto’s utility as a store of value, inflation hedge, and digital currency faltered.
The sell-off extended beyond crypto, with silver plunging 15 per cent and gold sliding more than 2 per cent. US stocks also fell.
The latest recoup saw the price of BTC up by 4.7 per cent to $67,978.96, as Ethereum (ETH) appreciated by 6.3 per cent to $2,021.10, and Ripple (XRP) surged by 9.5 per cent to $1.42.
In addition, Solana (SOL) grew by 7.3 per cent to $85.22, Cardano (ADA) added 6.1 per cent to trade at $0.2683, Dogecoin (DOGE) expanded by 5.4 per cent to $0.0958, Litecoin (LTC) rose by 5.2 per cent to $53.50, and Binance Coin (BNB) jumped by 2.3 per cent to $637.79, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Oil prices settled higher on Friday as traders worried that this week’s talks between the US and Iran had failed to reduce the risk of a military conflict between the two countries.
Brent crude futures traded at $68.05 a barrel after going up by 50 cents or 0.74 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $63.55 a barrel due to the addition of 26 cents or 0.41 per cent.
Iran and the US held negotiations in Muscat, the capital of Oman, on Friday to overcome sharp differences over Iran’s nuclear programme.
It was reported that the talks had ended with Iran’s foreign minister saying negotiators will return to their capitals for consultations and the talks will continue.
Regardless, the meeting kept investors anxious about geopolitical risk, as Iran wanted to stick to nuclear issues while the US wanted to discuss Iran’s ballistic missiles and support for armed groups in the region.
Any escalation of tension between the two nations could disrupt oil flows, since about a fifth of the world’s total consumption passes through the Strait of Hormuz between Oman and Iran.
Saudi Arabia, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, as does Iran, which is a member of the Organisation of the Petroleum Exporting Countries (OPEC).
According to Reuters, Iran objected to the presence of any US Central Command (CENTCOM) or other regional military officials, saying that would jeopardise the process.
The current confrontation was sparked by more than two weeks of unrest in Iran that saw authorities launch a deadly crackdown that killed thousands of civilians and shocked the world. As reports of the deaths trickled out of Iran, US President Donald Trump threatened to strike Iran if any of the tens of thousands of protesters arrested were executed.
Meanwhile, Kazakhstan’s planned oil exports could fall by as much as 35 per cent this month via its main route through Russia, as the country’s top oil company, Tengiz oilfield, slowly recovers from fires at power facilities in January.
ING analysts have pointed out Iran’s neighbour, Iraq, and a disagreement with the US as another bullish factor for oil prices. It seems Iraqi politicians favour Mr Nouri al-Maliki as the country’s next Prime Minister, but the US thinks Mr al-Maliki is too close to Iran. President Trump has already threatened the oil producer with consequences if he emerges as PM.
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