Perceived convenience, comfort drive millennials to shopping malls
by STEPHEN ONYEKWELU
March 2, 2017 | 12:41 am| | | Start Conversation
It was a particularly sunny day, the kind of solar intensity, accompanied by discomforting tropical heat typical of the dry season in many parts of Nigeria; Ndidiamaka, a 24 year-old 300 level student of Psychology at the University of Lagos, needed to go out and shop for the weekend.
Ndidi is atypical in the sense that she is not given to sporadic shopping sprees nor shopping on impulse, she likes getting her act together before going out to shop. She also dislikes the hassle that comes with having to hop from one shop to another and from one part of Yaba or Balogun market to another to find what she wants. In addition she likes to make the most of the up-keep allowance her parents avail her.
She enjoys shopping at Shoprite, Spar, Ebeano, Park n Shop, Payless, Best Price, and City Dia among others since she believes she gets to enjoy the best of shopping experience without the inconveniences of shoving shoulders at Balogun market.
“You see, for me price is important but what is more important is the shopping experience. I like to shop in a calm cozy environment. In fact, shopping at such environments helps me organise myself better” said Ndidiamaka Okoye.
Ndidi is not alone; she belongs to a generation of Nigerians who are growing up in a rapidly changing retail landscape. There are over 63 million Nigerians below 35 years of age and a great majority of these are urban dwellers, whose standard of living is steadily improving due to rising levels of education and income. These are called millennials, those born between 1980 and 2000.
“A number of factors determine where and how I shop. For starter, proximity is the major consideration. When a shopping mall is close by, I would rather go in there and do my shopping than wander faraway” said Rosemary Nnorom, a middle class spinster.
Nnorom added, “the other considerations are price and the nature of what I am shopping for. I like to shop for gift items, perfumes, and other hygiene products at shopping malls.”
With a population of over 182 million and retail mall space of less than one million square metres, Nigeria’s retail space is poised for growth but hindered by cumbersome land use Act, infrastructure deficit, difficult business and policy environment.
A purchasing power parity (PPP) estimated at $5360 (World Bank 2015) Africa’s most populous nation has total retail mall space of about 500,000 square metres, with the largest being the Tinapa Mall (80,000 square meters).
South Africa with a population of 40 million has available retail space of about 23 million square metres. Kenya has a population slightly over 45 million with a retail space close to two million square metres of retail space.
For the retail mall space to increase, an enabling policy environment is needed. For instance, in a bid to promote “made in Nigeria” goods the Central Bank of Nigeria created a list of 41 items barred from accessing foreign exchange. This is in addition to government’s reluctance to allow the forces of demand and supply determine foreign exchange rates. This has stopped intending global retailers from entering the market.
“If the government wants these retailers to produce locally, then it should demonstrate to them that there is a market for their goods. Once there is proof of effective demand for the goods, then a retailer would be prepared to start some level of backward integration at the local level” said ChudiUbosi, managing partner at UbosiEleh& Coy Ltd, estate surveyors and valuers.
Ubosi added “Shoprite has created a huge impact in the retail space by working with farmers to backward integrate for instance, improving the quality of processing and packaging. But they had to first ascertain the market existed by opening up retail channels.”
However, when the policies are hindering the entry retailers, they will lose interest in the market. This loss of interest might be temporary or permanent. Even when it is temporary and policies are reversed, investors would still create a window period to observe environment before they move in.
A source familiar with the matter opined that if for instance, there is change in policy effective in three months; it allows people room to plan and builds confidence in the market. However, in cases where policy changestake effect immediately, the wrong signal is sent to the investment and business communities.
This is because it becomes clear policymakers care little about investors who might have deployed capital in that space. Investors take time to make decisions and to plan. As long as policy implementation continues to be erratic it would further keep away investors and tighten the market. There will be reduction in capital flows towards Nigeria and those investment products, stifling growth of the retail market space.
Players in the market contend that the retail market will continue to experience increase in 2017, though not as high as 2016, its fundamentals remain strong.
Many projects that are in the pipeline will continue to be funded as their developers seek more equity participation to reduce debt and to get them finished within budget limiting cost overruns.
However, the high cost of borrowing internally and the unfavaourble economic headwinds internally make it difficult for external funds as willing and attractive as they may seem to come into the Nigeria despite the strong fundamentals for the retail market.
Big Read |