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Nigeria: prestige retailing Market watch: Africa A long road ahead With few channels in Nigeria for prestige brands to sell their products through, the standalone route could be the best strategy for some time to come by Alex Wynne hile modern retail is a relatively recent Wconcept in Nigeria, where the majority of business is still done in traditional open-air markets and small stores, the country has seen a wave of development in the sector of late. According to a report from McKinsey & Co, international retail openings in Nigeria are growing at a rate of 36% annually, albeit from a very low base. A ban on importing textiles to Nigeria, only lifted in 2010, was seen as a key factor hindering retail development. At the same time, acquiring and developing land in Nigeria is a slow, expensive process. “Regulations, land availability, distributor and supplier capabilities, and ease of imports are all roadblocks that will require time and effort to overcome,” said AT Kearney of Nigeria in its frst-ever African Retail Development Index. The number of international-style malls is still minimal, with the market dominated by credit: istock Persianas Group, which operates The Palms malls, three shopping centers with whom Nigerian consumer and climate. prices are high because of infrastructure and ELC-owned MAC chose to collaborate for its Commenting on the news at the time, Norman development costs which, in turn, demands high frst Nigerian stores last year. But a string of Sander, a consultant for South African property sales. Infrastructure is poor, red-tape is plentiful mall projects are under construction, and could developer Broll, which operates the Ikeja City and offcials often intervene.” change the retail landscape in years to come. Mall in Lagos, urged other players not to see Wilfrid Moulin, co-founder of South African this as a deterrent: “Doing business in Nigeria niche-brand retailer Metropolitain Cosmetics, Few options available is a challenge. But if you can offer middle class said he had been approached by potential As yet, however, there are no department stores Nigerians the right price, product, service, quality franchise partners to operate in Nigeria, but has as such in Nigeria, meaning that for prestige and choice, the sky is the limit.” so far been put off by the complex infrastructure. brands, distribution choices are extremely He advised South African retailers, who “I believe the concept would work though,” limited, although according to reports, Persianas have been keen to expand their business in he says. may introduce a department-store concept to high-growth countries across the continent, A few perfumery chains, like Montaigne Place one of its upcoming developments. to engage in market research and adapt their and Essenza, have developed the perfumery The South African chain Woolworths entered models accordingly, as Nigerians increasingly market, although according to observers, it the market last year with three stores, in are adopting the mall model, and footfall at is diffcult to expand beyond the fragrance partnership with local conglomerate Chellerams properties is rising. segment. In duty free, meanwhile, Dufry recently Plc, only to announce it was pulling out in Nevertheless, Sander warned, the Nigerian signed an agreement to operate three stores in December, citing diffculties of adapting to the market is not an easy one. “Mall rental Nigerian airports with locally based investment 56 September-October 2014 - N°19 - BW Confidential