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 Adedapo Adesanya
Seplat Energy Plc will revive hundreds of Nigerian oil wells laying fallow after completing the acquisition of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil.
The company said it aims to lift oil output to about 200,000 barrels a day, a move that will help boost Nigeria’s oil production levels, as it aims to reach 2 million barrels per day next year.
The transaction, according to Seplat, “is transformative for Seplat Energy, more than doubling production and positioning the company to drive growth and profitability, whilst contributing significantly to Nigeria’s future prosperity.”
The completion of the Seplat-ExxonMobil deal has created Nigeria’s leading independent energy company, with the enlarged company having equity in 11 blocks (onshore and shallow water Nigeria); 48 producing oil and gas fields; 5 gas processing facilities; and 3 export terminals.
Recall that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October approved the deal as part of a series of approvals, while it blocked Shell’s asset sale of up to $2.4 billion to the Renaissance consortium.
The acquisition of the entire issued share capital of MPNU adds the following assets to the Seplat Group: 40 per cent operated interest in OML 67, 68, 70 and 104; 40 per cent operated interest in the Qua Iboe export terminal and the Yoho FSO; 51 per cent operated interest in the Bonny River Terminal (‘BRT’) NGL recovery plant; 9.6 per cent participating interest in the Aneman-Kpono field; and approximately 1,000 staff and 500 contractors will transition to the Seplat Group.
MPNU adds substantial reserves and production to Seplat Energy; 409 million barrels of oil equivalent (MMboe) 2P reserves and 670 MMboe 2P + 2C reserves and resources as at 30 June 2024 and 6M 2024 average daily production of 71.4 kboepd (thousand barrels of oil equivalent).
Business Post reports that Seplat will be part of the payment this year, and will defer some to next year,
Speaking on the transaction, the Chairman of Seplat Energy, Mr Udoma Udo Udoma commended President Bola Tinubu for supporting this transaction and appreciated the support and diligence of the various ministries and regulators for all the work to reach a successful conclusion.
“We are delighted to welcome the MPNU employees to Seplat Energy. We are excited to begin our journey in a new region of the country, and we look forward to replicating the positive impacts we have achieved within our communities in our current areas of operations.
“Seplat’s mission is to deliver value to all our stakeholders, and we treasure the good relationships we have developed with the government, regulators, communities and our staff.”
On his part, the chief executive of Seplat Energy, Mr Roger Brown, described the acquisition as a major milestone, adding, “I extend my thanks to the entire Seplat team for their hard work and perseverance to complete this transaction.
“MPNU’s employees and contractors have a strong reputation for safety and operational excellence, and I welcome them to the Seplat Energy Group.
“We have acquired a company with one of the best portfolios of assets and related infrastructure in a world-class basin, providing enormous potential for the Seplat Group. Our commitment is to invest to increase oil and gas production while reducing costs and emissions, maximising value for all our stakeholders.
“MPNU is a perfect fit with our strategy to build a sustainable business that can deliver affordable, accessible and reliable energy for Nigeria alongside attractive returns to our shareholders”.
By Adedapo Adesanya
The National Pension Commission (PenCom) is projected to close the year with over N22 trillion in pension assets impacted by challenges like inflation and monetary policies.
This is according to PenCom Director-General, Mrs Omolola Oloworaran, at a press conference in Abuja on Thursday.
She said as of October 2024, the Contributory Pension Scheme (CPS) had 10.53 million registered contributors and pension fund assets worth N21.92 trillion.
Speaking at the conference-themed Tech-driven Transformation Shaping the Pension Landscape, which showcased PenCom’s strategic commitment to innovation, she said that the numbers reflected the agency’s unwavering commitment to fund safety, prudent management, and sustainable growth.
She explained that the pension environment was impacted by the wider economic challenges facing the country, noting that the sector battled multi-year high inflation, Naira devaluation, and the lingering effects of unorthodox monetary policies by the Central Bank of Nigeria (CBN).
Business Post reports that the apex bank hiked interest rates by 875 basis points this year alone to tackle persistent inflation which peaked at 33.8 per cent as of October.
She said that these challenges eroded the real value of pension funds and impacted contributors’ purchasing power.
“To address these issues, the commission has initiated a comprehensive review of its investment regulations.
“It is focusing on diversifying pension fund investments into inflation-protected instruments, alternative assets, and foreign currency-denominated investments.
“The goal is to safeguard contributor savings and ensure resilience against future economic volatility,” she said.
She restated the commission’s commitment to expanding pension coverage, particularly through the advanced micro-pension plan designed to encourage participation from the informal sector using technology.
“This initiative will make it easier for everyday Nigerians to save for retirement, aligning with our vision of inclusive growth and financial stability for all.
“The backlog in retirement benefits for retirees of the Federal Government’s Ministries, Departments, and Agencies (MDAs) will soon be settled.
“The federal government recently disbursed N44 billion under the 2024 budget to settle approved pension rights.
“We are collaborating with the Federal Government to institutionalise a sustainable solution to ensure retirees receive their benefits promptly, eliminating delays,” Mrs Oloworaran said.
She said that PenCom’s technology-driven transformation aimed to make the CPS more accessible, reliable, and sustainable.
“From data management to seamless contributions and regulatory supervision, we are paving the way for a future where the pension industry serves all Nigerians effectively,” she said,
Mrs Oloworaran also said that the e-application portal for pension clearance certificates has replaced the manual processes and enhanced the ease of doing business in the sector.
“Since its deployment, 38,528 pension clearance certificates have been issued. This initiative ensures compliance and secures the future of Nigerians working in organisations that interact with the government,” she said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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