Since international chains, such as Truworth, Mr Price, Mango, Maybrands, Shoprite and Us Polo, entered the Nigerian market with shopping malls, local chains in the Lagos metropolis, particularly those around the malls, are being threatened. TONIA‘DIYAN reports.
Before 2011, an old building was abandoned in Surulere, Lagos mainland. The state government decided to reconstruct it into shops for the residents of the area.
From its ashes rose the ultra-modern Adeniran Ogunsanya Mall. It houses some international chains, which are strong competitors for local chains around the mall. Local chains, however, believe the existence of the mall was to kill their businesses.
One of them, who spoke with The Nation Shopping but refused to reveal her identity, is a tenant at the Adeniran Ogunsanya mall. She said she managed to cope with the high shop rent to make sales. “I have noticed that since this mall was built, my customers have stopped coming to my shop on the road. So, I decided to squeeze myself financially to become a tenant here. It is very expensive to own a shop here, you know.”
Smiling, she said, after she joined the high and mighty there, “I realised that international chains are the preferred choices for consumers, because they are more patronised.”
She added that Surulere is being overshadowed by malls, as one more called Leisure Mall was added two years ago. “It is just next to this mall,” she said.
She sited a woman near her former shop. Her words: “Business has only got worse for someone like Mrs Anike my friend; she owns a shop on this road where I was before. And like many owners of local shops that dot township corners, Anike barely manages to keep afloat as most of her customers now head for the malls.
When The Nation Shopping visited Mrs Anike’s shop, it saw dusty shelves of tea-bags, small packets of biscuits, loose cigarettes and butter.
She said: “Once people get paid, they buy their groceries at the malls. They used to buy from me in bulk, now they only come for daily items.”
Mrs Anike has been running the shop with her husband since 1993. They used to earn about N105, 000 daily, but now they hardly make one-third of that amount. According to Mrs Anike and her husband Monsuru, they have become tuck shops – a slang word which means ‘just getting by’.
But while international chains are able to use economies of scale to undercut local ones, the latter buy in small volumes from wholesalers who drive up costs for them.
Unfortunately, the bulk of these local shops, about 70 per cent, are survivalists. Worse still, they do not have business, financial or literacy skills that would have helped them to get out of the woods.
However, some have teamed up with entrepreneurs and retail consultants, to buy directly from suppliers to enable them to make more profits.
On the other hand, the international retailers, which target rising consumer spending, have doubled in the last five years. These Cape Town-based firms are threatening the small shops.
Though data is not available, Michael Chu’di Ejekam of Actis Properties, the firm handling some of the shopping facilities, said Lagos State alone might have lost about 30 per cent of its local shop space since 2005, when the Palms Shopping Mall in Lekki pitched tent in the country.
Other malls housing international brands are Ikeja City Mall in Alausa, The Palms and Omisson Emporium malls in Lekki and Spar in Ajah.
At a seminar at Eko Hotel and Suites, Nike Ogunlesi, chief executive officer, Ruff ‘N’ Tumble, a clothing outfit for children, spoke about a changing and challenging world of business. She urged local chains to live up to their responsibilities and join the trend rather than complain and act as if they are defeated.
Nike said the retail sector is worth N23 trillion, representing 18 per cent of the clothing and footwear industry.
Given these figures and the size of the market, she said the challenges could be overcome. But the questions are; how, when?
She explained that the retail environment is dynamic, complex and unpredictable.
Her words: “We live in a world where demand is constantly changing, taste and values change, government laws and people change. Therefore, businesses must change, grow or risk stagnation, decline or even death.”
She added that business owners must rethink their approach/strategy, become global in their thinking and embrace new ways of doing business.
Nike asked: “How do we ensure the survival and success of our businesses in a Wal-mart or Shoprite world? Reminding people that there were some big businesses that went under before these chains came, she added that that the new ones are competing, surviving and making profits.”
She advised that for a local chain to compete effectively, it needs to develop and focus its business on seven strategies as developed by Wal-mart: “They are Price, operational excellence, culture (organisational), key item, promotion/ product, expense control and talent service.”
Nike added: “For success, knowing is not enough, we must apply. Willing is not enough, we must do.”
