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 Aduragbemi Omiyale
Stanbic IBTC Nominees Limited has been commended for its critical role in the Nigerian capital market, especially for safely keeping non-pension assets.
For the past 30 years, the company has provided custody services in Nigeria, and to celebrate this milestone, it was honoured with a closing gong ceremony at the Nigerian Exchange (NGX) Limited.
The milestone reflects the institution’s longstanding contribution to investor confidence and the continued development of the nation’s capital market.
Welcoming the organisation to Customs Street, the chief executive of NGX, Mr Jude Chiemeka, commended its three decades of custody services, recognising the firm’s role in strengthening investor confidence and enhancing market safety.
He highlighted NGX’s continued investment in technology, which he said has enabled over 2.6 million active retail investors to trade on the platform.
“Technology continues to be at the heart of our strategy,” Mr Chiemeka said, noting that a vibrant and secure marketplace remains essential to investor participation.
In his remarks, the chief executive of Stanbic IBTC Bank, Mr Wole Adeniyi, thanked NGX for its continued partnership, saying, “We are thrilled to be here today, commemorating not just our journey, but also the remarkable progress made by the NGX.”
He noted that the collaboration between the two institutions has continued to drive innovation, product development and thought leadership across the industry.
“We are dedicated to raising standards within the industry as part of Standard Bank Group. Our focus remains driving the growth and development of Nigeria’s capital market. Indeed, Nigeria is our home, and we drive her growth,” he added.
The chief executive of Stanbic IBTC Nominees, Mr Babatunde Majiyagbe, reflected on the evolution of the business from the era of physical share certificates stored in fireproof vaults to today’s fully dematerialised market, where securities are held electronically.
“We started with holding custody of physical certificates, investing in vaults with fire and dust protection, so those certificates could be presented when needed,” Mr Majiyagbe recalled, noting that while the market has evolved significantly, the commitment to service excellence has remained unchanged.
“What has endeared a lot of investors to the market is that they are dealing with a reputable organisation like ours. We are high on good governance, and high on technology, making the process of investment in Nigeria easier,” he said.
Mr Majiyagbe added that Stanbic IBTC Nominees’ role goes beyond just attracting foreign portfolio investment (FPI) and capital.
“For us, it’s not just about FPI; but also about the value we have delivered over 30 years. Stanbic IBTC Nominees continue to be the eyes and ears of foreign and domestic investors in our market,” he stated.
Mr Majiyagbe added that the firm has also supported the development of market rules and safeguards, noting: “We have, over the years, advocated for growth, change, transformation and stability in our capability to provide services to domestic and foreign portfolio investors continuously.”
The deputy chief executive of Stanbic IBTC Bank and Chairman of Stanbic IBTC Nominees, Mrs Bunmi Dayo-Olagunju, said the next phase of growth will build on the institution’s legacy of trust.
“For 30 years, we’ve delivered growth, security, and client confidence. That’s why investors have stayed with us and why new business keeps coming.
“Our target for this new phase of growth is simple: build on that trust and ride the acceleration in Nigeria’s economic activity.
“With custody, settlement, capital raise, and advisory integrated on one platform, we’re not just a custodian. We’re an infrastructure. We look forward to building on that trust for generations to come, serving both local and international clients. Hopefully, we’ll have another 100 years of maintaining that trust with local and international markets,” Mrs Dayo-Olagunju said.
By Dipo Olowookere
The positive market breadth index recorded by the Nigerian Exchange (NGX) Limited could not save it from further claws of the bears on Friday.
The major performance indicators, the All-Share Index (ASI) and the market capitalisation, depreciated by 0.03 per cent and 0.01 per cent, respectively.
The ASI was down by 78.58 points to 245,283.68 points from the previous day’s 245,362.26 points, and the market capitalisation receded by N14 billion to N158.326 trillion from Thursday’s N158.340 trillion.
Business Post reports that market participants traded 943.0 million equities valued at N46.7 billion in 55,480 deals compared with the 2.1 billion equities worth N230.8 billion transacted in 48,231 deals a day earlier.
This implied that the trading volume shrank by 55.10 per cent, the trading value reduced by 79.77 per cent, and the number of deals surged by 15.03 per cent.
An analysis of the sectoral performance showed that the consumer goods space crashed by 0.60 per cent and the energy index went down by 0.09 per cent.
However, the banking sector improved by 1.90 per cent, the insurance counter expanded by 0.75 per cent, and the industrial goods segment soared by 0.10 per cent.
There were 33 appreciating stocks and 29 depreciating stocks during the last trading session of the week and month of July, indicating bullish investor sentiment despite the poor outcome.
CAP lost 9.97 per cent to trade at N128.25, Veritas Kapital depreciated by 9.49 per cent to N1.43, Vitafoam Nigeria slipped by 7.70 per cent to N179.80, The Initiates dipped by 6.67 per cent to N28.00, and NAHCO crashed by 6.63 per cent to N155.00.
Conversely, Eterna gained 10.00 per cent to sell for N33.00, Consolidated Hallmark also grew by 10.00 per cent to N8.36, McNichols expanded by 9.52 per cent to N5.75, Honeywell Flour increased by 8.96 per cent to N18.25, and First Holdco chalked up 8.00 per cent to quote at N129.55.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its bullish run on Friday, July 31, by 0.99 per cent.
This raised the NASD Security Index (NSI) by 43.54 points to 4,431.71 points from 4,388.17 points, and lifted the market capitalisation by N26.13 billion to N2.659 trillion from N2.633 trillion.
The growth came amid a significant decline in the activity level, as the volume of securities decreased by 73.0 per cent to 690,990 units from 2.6 million units, the value of securities slid by 15.0 per cent to N75.0 million from the preceding session’s N88.3 million, and the number of deals contracted by 31.6 per cent to 26 deals from the 38 deals recorded a day earlier.
The most active stock by value on a year-to-date basis remained Great Nigeria Insurance (GNI) Plc, with a turnover of 3.4 billion units valued at N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.6 million units exchanged for N5.5 billion.
The most active stock by volume on a year-to-date basis was also GNI Plc, with the sale of 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
Investor sentiment was bullish yesterday after a positive market breadth index triggered by five price gainers and two price losers, led by 11 Plc, which gave up N14.99 to close at N225.01 per share versus the previous day’s N240.00 per share, and MRS Oil Plc, which shed N14.55 to settle at N132.00 per unit versus N146.55 per unit.
However, Nipco Plc gained N41.50 to sell at N456.50 per share compared with the preceding session’s N415.00 per share, FrieslandCampina Wamco Nigeria Plc appreciated by N12.93 to N147.93 per unit from N135.00 per unit, Nitrox Industrial Gases Plc improved by N1.00 to N20.00 per share from N19.00 per share, CSCS Plc soared by 54 Kobo to N102.00 per unit from N101.46 per unit, and Industrial and General Insurance (IGI) Plc jumped by 1 Kobo to 50 Kobo per share from 49 Kobo per share.
