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Tag: recession

  • Nigeria will be out of recession by end of 2nd quarter – Emefiele

    Nigeria will be out of recession by end of 2nd quarter – Emefiele

    The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has assured Nigerians that the country would get out of economic recession latest by the end of June this year.

    This, according to him, is based on emerging positive economic indicators to that effect.

    Emefiele gave the assurance at the National Assembly Complex on Tuesday while fielding questions from journalists after a closed-door meeting with the leadership of the Senate.

    He said one of the indicators was the downward trend in the parallel market as regards the value of   Naira against the dollar which has appreciated from as higher as N525 per dollar to between N370 to N380.

    Other indicators according to him are the already confirmed reduction in the rate of inflation by the National Bureau of Statistics (NBS).

    He said that the CBN had been involved in some form of intensive interventions in the foreign exchange market and this has fortunately resulted in a downward trend in the parallel market price of foreign exchange from as higher as N525 to as low as N370.

    “I think it’s an opportunity for me to say that we are going to continue this intervention because the reserve looks very good. As I speak to you our reserve stands at above 31 billion dollars and that provides us enough of firepower or ammunition to be able to defend the currency and we will do so with all intensity to ensure that foreign exchange is procured by everybody.

    “We have started to see a downward trend even in prices of goods and commodities and you have also must have observed that inflation is also trending downward as confirmed by NBS.

    “We are very much optimistic that by the end of the second quarter very latest third quarter this year, we should be out of recession that we are in right now”.

    He assured that the downward trend in the parallel market in favour of the Naira  would be sustained by the CBN through its needed interventions and in particular, through the policy of willing buyer and willing seller basis.

    “I think what is important is that last week we brought out an announcement which is meant to encourage our foreign investor community to get involved as well in the foreign exchange market.

    “It is the market or window that is opened for them to inflow their foreign exchange and come into the market on what we called a willing buyer, willing seller basis in which case there will be no form of any price intervention by anybody and indeed even including the Central Bank,” he said

  • Recession: Nigeria ’ll soon bounce back, says Dogara

    Recession: Nigeria ’ll soon bounce back, says Dogara

    House or Representatives Speaker Yakubu Dogara yesterday said there are obvious signs Nigeria will bounce back from recession soon.
    Dogara, who was represented by Jimmy Benson, said activities of the House Tactical Committee on Economic Recession were generating consciousness in the economic sector and relevant government sectors.
    The Speaker, who spoke in Lagos at the opening of a four-day retreat for members of the House Tactical Committee on the Economic Recession, said institutions had taken proactive steps that have cushioned the impact of the economic crisis.
    He explained that the retreat themed: “Proactive Steps to Abate the hardship” being experienced by Nigerians as a result of the current economic recession’ was aimed at gathering information from experts in the economic sector to enable lawmakers proffer solution to exit recession.
    Dogara said the House constituted the committee to monitor steps and policies of the government aimed at pulling the economy out of recession.
    He noted that the committee, inaugurated on Tuesday, February 14, came into being after the House, on Thursday, January 26, considered the motion on economic recession.
    The Speaker said: “The committee has the mandate to interface with government, ministries, agencies and departments as well as Manufacturers Association of Nigeria (MAN), Nigeria Labour Congress (NLC), civil society organisations and any other relevant bodies considered relevant in the bid to arrest the recession and return the economy to the path of growth and stability.”
    The committee’s chairman, Bode Ayorinde, said the committee had held several meetings and interacted with major stakeholders in government, including Vice President Yemi Osinbajo, Ministers of Finance and Budget and Economic Planning as well as Central Bank of Nigeria and Nigeria Customs Service.

  • Nigeria still in recession, says don

    Nigeria still in recession, says don

    Amid the euphoria generated last week on the economy coming out of the woods, a Professor of Financial Economics, University of Uyo, Akwa Ibom State, Leo Ukpong, has called for caution, saying it is not yet time to celebrate.

    The World Economics, a London-based organisation engaged in global economic forecast, reported that the country’s economy has recovered from recession.

    The global body drew its conclusion from it Sales Managers’ Index (SMI),which tracks composite activities within an economy, such as business confidence, market growth, sales, prices, and staffing levels, to arrive at its forecast. If the index is above 50, it indicates a sign of growth in the economy, and if below 50, it signals an economic contraction. Its forecast for April 2017 places the index at about 58.5 points, from about 47 points in January 2017.

    Ukpong told The Nation at the weekend, that though the component of the SMI were leading indicators of economic activities, they do not correlate strongly with the major drivers of economic drivers. These drivers, he noted, include crude oil prices, the government expenditure, Naira appreciation, low inflation, and increased Foreign Direct Investment (FDI).

    “In my own assessment, when those factors listed above show strong “positive” trends over three to six months, then economic recovery is around the corner,” Prof Ukpong, who is also the Dean, Faculty of Business Administration, explained.

    He said given the high level of inflation, weak crude oil prices, high interest rates, weak naira, anaemic manufacturing activities, and lack of strategic economic focus in government spending, it will not be surprising if the current recession last through the third quarter of this this year.

    He however said all hope was not lost. “With prudent and well-coordinated economic policy, especially between the monetary and the fiscal authorities, we could see some economic silver linings by the end of the second quarter of 2017,” the don said.

  • ‘How to sustainably exit recession’

    Following the declaration by London-based World Economics that the Nigerian economy is out of recession and growing strong, experts have come out with viable options to sustain the economy.

    They spoke in Lagos on the sideline at a symposium organised by the Export Group of Lagos Chamber of Commerce & Industry (LCCI) with the theme: “Non-oil export: The way out of recession”.

    They said though, the economy may have been on its way out of recession, there are options to ensure that the exit is sustainable.

    An economic analyst, Dr. Ayo Teriba, said the country may be on its way out of recession if government bridges the gap between the parallel and the official foreign exchange (forex) market rates.

    He said the slump in oil prices to as low as $20 per barrel, down from over $100 per barrel, and the militancy in the oil rich Niger Delta region drove the economy into recession from 2014 to 2016 as the economy failed to withstand the low oil prices.

    The Economics said the continued rise in the price of oil to about $50 was enough to lift the nation out of recession by encouraging growth and fall in inflation rate.

    “As severe as Nigeria’s economic problems, it can reverse itself if the government can put the right policy in place. The truth is that even if oil is still hovering around $20 per barrel there are things we can do to avoid inflationary shocks such as bridging the gap between the parallel and the official forex market rates,” Teriba said.

    He pointed at the huge potential in the non-oil export sector as another viable option to salvage the economy from recession, and of course, portfolio investments.

    He, however, said portfolio investors’ interest in any economy is as long as they believe their investment is safe. According to him, portfolio investors are always ready to shift loyalty at the slightest threat to their investments.

    Teriba also harped on the need to lay more emphasis on Diaspora flow and Foreign Direct Investment (FDI), noting that commitments from these are usually irreversible as exemplified by the Nigeria Liquefied Natural Gas (NLNG) and the telecommunications companies.

  • ‘Recession offers investment opportunities in capital market’

    ‘Recession offers investment opportunities in capital market’

    Mrs. Titi Ogungbesan, Managing Director/Chief Executive, Stanbic IBTC Stockbrokers Limited in this interview with Ibrahim Apekhade Yusuf speaks on the huge investment potential in the capital market despite the lingering economic recession among other issues. Excerpts:

    Do you think the lingering economic recession offers any fresh opportunities for investments in the capital market?

    There is no doubt that the downward trend in the equities market presents buying opportunities, in my view, as many of the listed stocks are believed to be under-priced compared with their intrinsic value. We at Stanbic IBTC believe it is the right time for investors to take position in the market, especially in quality names with attractive valuation supported by compelling outlook.

    We believe Nigeria’s current economic situation is just a ‘slowdown’ as the country passes through this transition phase to what we potentially call a reinvigorated growth phase. We believe ongoing economic reforms if properly managed will be the much needed catalyst to unlocking the country’s vast potential. We favour development of domestic manufacturing capacity as a sustainable fulcrum for Nigeria’s growth. There is an urgent need to develop other key manufacturing sectors of the economy to an export potential so as to be less dependent on oil for FX and deliver inclusive growth. While we acknowledge that the weak macro could keep valuations depressed for a prolonged period, it is difficult to time when the market will turnaround hence in the near term, we will advise investors to take positions in quality names as the opportunity arises.

    One of the issues that have remained hotly debated is the issue of diversification. What form should this take?

    More products are being developed by market operators and participants to further deepen the Nigerian capital market. Over the past few years, a few products such as ETFs have been introduced and constant engagements are going on to build a suite of exchange tradable products. We believe having a range of products will also attract new investible funds. Additionally, the sector split of the NSE is skewed to financials and manufacturing sector and not a true reflection of the Nigerian economy. The listing of more companies in sectors such as ICT, agriculture, power and oil and gas should increase diversification.

    The Debt Management Office a few years ago appointed Stanbic IBTC Stockbrokers Ltd as the stockbroker to FGN Bonds. What has been the response of the market thus far?

    Market response has been positive and retail investors’ participation has improved over time. We expect further future improvement in the level of participation. Stanbic IBTC Stockbrokers Limited in its role as Stockbroker to FGN bonds has organised seminars/workshop in partnership with the DMO and the NSE aimed at creating more awareness amongst investors on the opportunities in the fixed income market. There has been renewed passion for retail bond trading and we expect this to translate into more transactions on the floor of the NSE.

    In a related development, the appointment of Stanbic IBTC Stockbrokers Limited by the Nigerian Stock Exchange as one of a 10-member list of market makers further reinforces company’s ability to deliver on its mandates. To what extent has this assignment helped in stabilising the capital market?

    Our role as a market maker is to correct price imbalances whenever the need arises as well as provide liquidity in stocks which will ultimately help the capital market. We also think that the introduction of Securities Lending product will aid Market Makers in performing their role effectively.

    Last year’s conference as well as previous editions of the conference focused on sustainable economic growth and development. This year’s conference would be the 8th edition, would you say that your objectives for organizing the annual conference are being met?

    Absolutely! Foreign inflows whether as FDIs or FPIs are critical sources of capital that ignites growth in any country. However, these flows would not be available if investor confidence in the country is lacking and that has always been one of our goals for the conference every year; to expose foreign and domestic investors to the numerous opportunities that abound in the country. Although the prevailing macro-economic situation in Nigeria has affected investors’ confidence in the market, we will continue to show opportunities that make Nigeria a critical economy in the frontier market. We have been doing that over the years and we will continue to do so. Therefore we are proud to affirm that the objectives of the conference are being met.

    The Nigerian environment is generally regarded as difficult for doing business due to challenges such as poor electricity supply, non-existent or collapsed infrastructure, insecurity, among others. These factors undoubtedly impede the competiveness of the Nigerian economy. What compelling argument will you offer to make anybody invest in Nigeria’s economy?

    Nigeria being the biggest economy in Africa GDP terms offers a compelling reason for investors to consider investing in the market and the economy as a whole. With the new government in place we expect to see some positive changes though it might be gradual and we expect long term funds to look at the potential returns on a risk-reward basis which we believe will justify investing in Nigeria. Currently, there are investment opportunities in infrastructure, agriculture, manufacturing and real estate.

    Given the current situation, what specific areas of the economy will you be advising investors to tap into?

    We think asset classes exposed to Nigeria’s infrastructure and agriculture sectors offers good investment potential. Nigeria’s high infrastructural deficit and the underutilised capacity in agriculture is a supportive catalyst that could underpin growth in the medium term. We believe that with the 28% of the N7.29 trillion 2017 budget that is billed for capital projects which infrastructure forms a major part of, the state of infrastructure should start improving moderately. Nevertheless, we acknowledge the poor level of execution of capital budgets in the past and the low capacity to execute. That is the reason why the engagement of the government with the private sector is welcome and encouraging and could result in a faster pace of closing the infrastructural gap. The development of infrastructure such as electricity, railway transport and more road networks should unlock opportunities in sectors such as agriculture and manufacturing. Given our population, the country is a ready market for a number of the finished goods so the export market should not be an immediate concern.

    The listing of major companies, particularly in the oil and gas, power and telecoms sectors, on the Nigerian Stock Exchange has remained a matter of intractable debate, with both sides offering strong arguments that appear to have stalemated the issue. What role can market operators like you play to break the deadlock and possibly encourage the targeted companies to quote on the local bourse? 

    The market can support the government’s financing efforts by raising capital for infrastructural projects through primary issues and public offerings. The major point here is capital whether for expansion or for diversification or even taking on new projects- that is what the Stock market provides. Companies that have a good business model and a good track record of profitability over the years, investors will want to be part of such businesses. The challenge we now have to take on as market operators is identifying those companies, engage them and intimate them of how the Nigerian stock market can both create more liquidity and value for their business. I must mention that although the operating environment is quite challenging at the moment for most businesses in those sectors. There has to be a really compelling story for the companies wishing to list on the exchange to get their desired level of liquidity.

    The capital market is expected to play a major role in helping government finance a huge budget deficit this year. Considering the general apathy in the market, particularly by foreign investors, how well can the market support government’s financing efforts?

    The federal government has always and will continue to tap into the fixed income market as a way of providing funds and finances to fund a budget deficit. We believe that the domestic pension funds and other investors have sufficient capacity to support government’s bond issues. Issuing project related bonds would also be an avenue to raise funds to plug the budget deficit in our view This will however have to be looked at from a contract sanctity perspective. On the equity side of the capital market space, one way to fund the government deficit is by getting some of the properly-run government agencies to list on the exchange. Take for example NNPC listing on The Exchange or perhaps the National Communications Commission (NCC). The power of sovereignty alone could be compelling enough for investors to invest and hence for the government to source the liquidity it requires.

    Stanbic IBTC is a dominant player in Nigeria’s capital market; how has stock market volatility and the weak performance of recent public offerings affected your overall performance in the last one year?

    Investor apathy towards Nigerian equities at the moment cannot be overemphasised and all due to a number of reasons; weak outlook of the Nigerian economy following the crash in crude oil prices, reduced FX liquidity, weaker company-specific fundamentals amongst others. The impact has been felt on the entire bourse with the Nigerian All share index declining by about 16.14%, 17.36% and 6.17% in 2014, 2015 and 2016 respectively. This is significant as investors are not keen on taking positions at the current price level because of the fear of further diminution. Although there is still liquidity in the system as a whole, we will continue to engage investors to look at sound investment.  We remain and would continue to work towards being the number one stockbroking firm in Nigeria.

    It is said that the future that comes to fruition does not just happen; it is accomplished by human effort. As a company what goals have you set for the firm in the next four years?

    Yes we have consistently been the market leader in the stockbroking space over the last couple of years. Just like the brand we represent, we aspire to continue to be the market leader. In addition, we look forward to partnering with the capital market regulators to introduce and champion progressive initiative relating to investment vehicle and education.

  • Recession, blessing in disguise

    SIR: Nigerians would begin to smile when things put in place by the present administration comes into fruition. Nigeria is in a sorry state with many losing hope in the country due to the recession. Though the most populous black nation, we have not lived up to expectation and have not achieved the dreams of the founding fathers.

    Even as the economy is in recession, we should all be committed to reviving and restoring the country; we should remain undaunted despite challenges we are going through. I believe we have not lost all the opportunities to be a great nation and a pace setter for the black race.

    We are yet to attain some level of development. We might not yet be there but we are not stagnant and would get there definitely. Ours won’t be different and Nigeria won’t be an exception.

    It is very unfortunate and sad that nations like Singapore and Indonesia gained independence the same period with us but is doing better and have gone far ahead of us. We mustn’t continue like this. The revolution must start from the top. Our leaders must be selfless. We need visionary leaders and a dynamic political leadership. The present leaders should put in their best, put in more effort and should make judicious use of their offices to build this country, because the society you neglect today would take its revenge on the children tomorrow. They should strive for the good of Nigerians and this great country.

    I pray that this recession would be a blessing in disguise for us all. Just as a popular Nigerian artiste sang “just like raindrops falling from the sky, just like tear drops falling from my eyes, it is like a blessing, a blessing in disguise, that we fail to realize now I have to pay the price”. Everything about this recession would be a blessing in disguise.

    Nigerians should have faith, hold on and be strong; everything would be alright.

     

    • Elizabeth Ugbah,

    Lagos.

  • CAN, clerics preach against corruption, recession

    CAN, clerics preach against corruption, recession

    Christian Association of Nigeria (CAN) President Rev. Samson Ayokunle has assured Nigerians that the power of resurrection will end the menace of corruption and recession.

    This came as the Methodist Church Nigeria Prelate Dr. Kanu Uche and Bishop of Trinity Church Council, Methodist Church Nigeria, Rt Revd. Oladapo Babalola urged political leaders to desist from corruption.

    Ayokunle, who gave the assurance yesterday in his Easter message, which was signed by his Special Assistant (Media & Communications), Adebayo Oladeji in Abuja, prayed to God to end economic hardship the way He rolled away the stone from the tomb of Jesus Christ.

    The statement reads: “I wish all Nigerians a happy Easter in the name of Jesus Christ our Lord. It is a season of hope, joy and restoration.

    “The Lord that rolled away the stone from the mouth of the tomb to put the enemy to shame will roll away all causes of economic hardship from our nation in the name of Jesus.

    “Corruption will be a thing of the past. As earthquake came to help in removing all hindrances to the resurrection of Christ for a glorious dawn to emerge, the God of heaven will divinely intervene to bail our nation out of economic downturn in the name of Jesus.”

    Ayokunle, who noted the agony of the disciples of Jesus Christ over his death and how their sadness turned into joy on the resurrection morning, was optimistic that the future of the country would be characterised by abundance, joy and celebrations.

    He said: “As the resurrection morning brought a day of joy and laughter back to the disciples, the future years shall be full of abundance in Nigeria and bring back our joy and celebration in our streets in the name of Jesus.

    “May our challenges of today become our ladders to our testimonies tomorrow in the name of Jesus. It is well with you, our leaders at all levels of government and our nation in the name of Jesus Christ.”

    Ayokunle, who is also the President, Nigerian Baptist Convention, urged the citizenry not to cease praying for the country and those who are at the helm of affairs as they confront the challenges facing the populace.

    Dr. Uche spoke yesterday at the Methodist Church of the Trinity, Tinubu Square, Lagos, during an Easter Sunday service to celebrate the remembrance of the resurrection of Jesus Christ.

    According to him, there should be no one-sidedness in the fight against corruption.

    “We should love ourselves as a nation and know that we are all one and equal before God. We should not promote corruption and evil; we should ensure that justice for one is justice for all.”

  • Recession: Man pays N42m tithe in Benue church

    Recession: Man pays N42m tithe in Benue church

    A man, whose identity has been shielded by a local church in Makurdi, has shocked church members with a tithe offering of N42 million.
    Investigations by the News Agency of Nigeria (NAN) in Makurdi revealed that the money was paid into the UBA account of the NKST Church High level Makurdi.
    Although the resident pastor of the church, Dr. Frederick Ikyaan, initially denied knowledge of such offering, a copy of the church’s quarterly financial report, covering the months of January – March, confirmed the payment of N42million tithe to the church.
    The report showed that the lodgment was the highest single offering from an individual for the quarter.
    The money was paid into the church’s account in January.
    The breakdown of the church’s financial report showed an income of N56.2 million and an expenditure of N33.7 million within the same period..
    The church’s records also showed that out of the income, N44.6 million was generated from tithe, while a single person accounted for N42 million.
    Reacting to the financial report, the pastor said his initial denial was based on the allegations that the donor was an appointee of the Benue State Government.
    “ I still stand by my words that the person that gave us that money is not an appointee of the state government. In fact, he does not even stay in Benue but is an indigene of the state.”
    He said there was nothing wrong with the offering and insisted that the church has nothing to hide.
    Meanwhile, the tithe offering has stirred controversy in a state struggling to pay the salaries of workers.
    Public discussion centred on the legitimacy of the donors income, as a man who pays N42m to a church as tithe must have made an income of N420 million in the month that he paid.
    The NKST Church is an abbreviation for ‘Non go Kristu U Sudan hen Tiv’, meaning the Church of Christ Amongst the Tiv.

  • Recession, exchange rate adjustment and growth

    Recession, exchange rate adjustment and growth

    For more than two years now, Nigeria has been in a recession, one of the worst in its recent economic and financial history. Last year, the economy contracted by 1-3 per cent, the exchange rate of the naira against the US$ fell sharply as a result of falling oil revenues, and the inflation rate rose to nearly 18 per cent. All these economic and financial indicators caused much concern in our country. The direct consequences of the sudden downturn in the domestic economy included massive job losses, large federal budget deficits, a resort to both internal and external borrowing to cover the huge deficits, and a loss of investors’ confidence in our economy.

    Obviously, something radical and drastic needed to be done to stabilise the domestic economy and bring it back into equilibrium. In all this, domestic factors are clearly important. Some of these include our high population growth rate (averaging 3 per cent), mass poverty, high rate of unemployment, high infant mortality rates, low literacy rates, terrorist activities, a fragile political system and institutional weaknesses. All these make it more difficult to effect the necessary structural adjustment to tackle the recession in our economy and adjust to external factors. In view of Nigeria’s high import dependency, we needed to cut back on imports by introducing a barrage of fiscal and monetary measures. Of these, the most crucial is the exchange rate adjustment of the naira, the national currency.

    This is the economic and financial situation the CBN has been battling with in the last two years. Its strategy was one of managed exchange rate adjustment, instead of a free floating exchange rate adjustment. But the practical and predictable effect of its strategy was the wide divergence of exchange rates of the official market and the so-called black market, with the latter forcing the official rate down. This divergence in exchange rates has led to policy distortions. Instead of a uniform exchange rate, we have had at least five different exchange rates. These multiple exchange rates, including a different one for religious pilgrimage, indicate a form of subsidy, a negation of the policy and strategy of the removal of all forms of subsidies from the domestic economy. Now, these distortions in exchange rates lead to a loss of investors’ confidence in the economy. It makes planning of any kind virtually impossible and constrains growth in the economy.

    More recently, the increase in oil exports and revenue has allowed the CBN to increase its supply of forex into the economy. It has begun to drop its resistance to the nominal devaluation of the naira, a policy that was doomed to failure in the light of the sharp fall in oil revenues and forex. The naira remained overvalued. One indicator of overvaluation of any currency is the difference between official nominal exchange rates and parallel market rates. Where, as in Nigeria, the parallel market rate is a third higher than the official rate, there is a case of overvaluation involved. As was expected, the divergence in exchange rates between the official inter-bank market and the bureaux de change has narrowed considerably because of the increased supply by the CBN into the economy. It is reported that the CBN’s strategy and target is to get the exchange rate down to N250 to the US dollar. This is commendable and, if sustained, will be a shot in the arm for the economy.

    However, despite the obvious signs of a contraction in the recession, and the narrowing of the divergence in the exchange rates of the official and parallel markets, it is not yet UHURU. The IMF is not always right in its advice and prescriptions to poor countries that are facing a recession. Its blanket advice to cut public spending tends to intensify a recession rather than ease it. It does not take account of the variability in the economic conditions of the countries to which it is offering advice. To get out of a recession, governments need to spend more through internal and external borrowings to stimulate economic activities and create more jobs. However, our fiscal and monetary authorities cannot completely ignore advice from the IMF and the World Bank on how to end the recession and resume growth. In addition to our forex strategy, the economy needs complementary fiscal and monetary measures to bring it out of recession and resume modest growth.

    In its recent review of the economic situation in Nigeria, while commending the CBN for its forex management, the IMF advised the Nigerian authorities to ‘remove the remaining restrictions and multiple currency practices, thus unifying the foreign exchange market’, and this strategy ‘should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations”. This is advice that should not be ignored. Inflation is now close to 18 per cent as a result of the sharp increase in money supply. Inflation undermines economic growth and tends to reinforce the divergence in exchange rates between the official and parallel markets. In addition, the injection of forex into the economy should be measured and not done too hurriedly as it has the potential of ‘overshooting’ the stability needed in the exchange rates.

    There is already a slum in the demand for forex, a clear indication that some of the demand was speculative. There is also some evidence of round tripping in the sale and disbursement of forex by the banks. It was reported recently that two directors of the CBN were implicated in the fraudulent round tripping of forex to the BDCs. Too much supply of forex to the banks will reinforce this criminal tendency in the sale of foreign exchange. Besides, there is a lot of stolen money being hurriedly converted into forex to conceal it from prying eyes, particularly the EFCC.

    In addition, it is difficult to predict how long the increase in oil exports and revenue will last. A crisis in oil exports and revenue is always around the corner. The CBN will, in the circumstances, be well advised to keep the sale of forex to its barest minimum so as to avoid getting again into a situation of wider divergence in exchange rates.

     

  • How to survive recession, by retailers

    How to survive recession, by retailers

    Against the backdrop of the lingering recession, most retail businesses have adopted ingenious means  to tackle the credit crunch taking a toll on businesses, reports TONIA ‘DIYAN. 

    There are growing concerns for the survival of many businesses, especially as the recession bites harder. For retail businesses, the concerns are just the same. However, for a retail merchant worth who knows his onions there’s a way out.

    Patience Agelibe, who runs a chain of small retail stores, has since devised ways of coping with the recession. Agelibe, mindful of the threat posed by the bullish big stores that have the wherewithdal to run their business, including giving away products at the cheapest rates, said efficient delivery of customer service was necessary to win new prospects and old customers.

    Similarly, Delightsome Stores Chief Executive Officer (CEO), Mrs. Modupe Shopeju, said: “It has to do with the strategy employed by the store, big or small.”

    She said: “Naturally, the retail climate favours big-box stores that can offer bargains. But because small retailers cannot win price wars, they need to leverage their biggest advantage over the chains. Small stores owners are aware that personal relationships with customers and the ability to deliver superior service remains one strategy that keeps businesses thriving. This strategy has been the secret of many successful retail business over the years.”

    As shoppers become more value focused, some are turning toward big-box retailers. Therefore, the small ones can bolster sales by targeting wealthier shoppers who are less price-sensitive and may pay premiums for better service. Upper-income households often perceive value in different ways from lower-income shoppers, Shopeju added.

    Independent retailers who are willing to survive the recession, experts have advised, need to court their best customers in the market they are targeting. Maximising the one-on-one relationships  with customers is also a major factor. And one way to do that, they said, is through affinity discounts that encourage loyal customers spend more, rather than trying to attract new business by cutting prices across the board.

    Going to customer base and mailing out to their best customers this they argue it’s a lot smarter than putting a 70 per cent off sign in front of one’s store.

    Experts also advised that through affinity programmes, retailers can strengthen their relationships with their best customers and appeal to those shoppers’ bargain-hunting at the same time. Beyond customer service, they said retailers should keep inventories lean to reduce costs  and be vigilant in refusing late orders as well as watching for over shipments to avoid having merchandise they would not be able to sell.

    In addition, small retailers can take a cue from large chains that display as much merchandise as possible on the floor, rather than holding inventory in the stockroom.

    Likewise, stores should watch their staff levels to control costs. They want to staff to the peak hours as much as they can. That means mostly in evenings and weekends, as most two-income families have little time to shop during the day. Businesses might decide to open later in the morning and extend hours at night to reach more customers without needing to staff more hours.

    Marketing companies are experimenting with new digital technologies to pitch to consumers while they shop. These include interactive dressing-room mirrors, kiosks with virtual customer-service representatives, shopping carts and digital scanners that offer personalised discounts.

    The experts also noted innovative ways for marketers to connect with customers as part of efforts to better understand what consumers buy and to encourage companies to rethink their approaches to their roles.

    However, for retailers grappling with lacklustre sales and consumers, who are dissatisfied with say online shopping with its related interactivity becoming mainstream, retail experts have advised retailers to continue to explore investment opportunities that can drive traffic to their outlets.

    They said there were strategies for retail businesses to survive in harsh economies, such as having a short-term tactical approach to improve performance and increase efficiencies that will drive sales, as well as medium to longer term strategic choices that will deliver sustainable and incremental growth.

    Location of the stores and product category are strategies which they think the retail giants always take into consideration.

    Citing Shoprite, they said the retailer has always been about the customers and has continued with its CSR initiatives and customer loyalty regardless of the recession.

    The proximity to any Shoprite store, they said, had made shopping  convenient for customers, noting that about 80 percent of the goods on the shelves are indigenous.

    Lending credence to the issue, the Business Development Manager of Chastest Consult, Ini Archibong, who is the Public Relations (PR) Consultant to Shoprite, noted that the monthly in-house and online competition in which lots of shopping voucher is given away among other loyalty programmes, are some of the time-tested principles that is working for the big retail stores like Shoprite.

    For the  Executive, Director Polo Luxury Group, Jennifer Obayuwana, despite the recession, excellent customer service remains a top priority at Polo Luxury.

    “Arguably, the recession is making shoppers of luxury goods look inward to what is available locally as shoppers save on flight fare. This is excellent for the Polo Luxury brand as it sticks to quality and authentic goods. Customers do not have to spend the extra travel fare, yet are accessible to the same quality of products and after-sales care they would have abroad at home.”