Nigeria is the largest market in Africa with a population of 232 million, expected to reach 400 million by 2050. The country is also the sixth most important African destination for Belarusian goods. In 2024, our shipments there jumped 2.6 times, showing ample demand for a number of exports.
One of Nigeria’s fastest growing sectors is retail trade, especially of groceries, ready-made clothes and consumer electronics. About 95 per cent of the turnover and 70 per cent of the total number of purchases are still made in street markets, convenience shops, stalls and kiosks. There are about 600,000 of these in Nigeria. But chain retailing is growing, thanks to investment in modern shopping malls and changing population structure and preferences.
Already now, more than 50 per cent of the country's population live in urban areas, and this number is set to increase 1.5 times by 2030. Despite the economic challenges resulting fr om sharp fluctuations of the naira and high inflation, the share of the middle class keeps growing, demanding ever more quality services and goods. As a consequence, modern retail chains are struggling but steadily replacing traditional markets.
Big players not only cater for the growing demand for quality products, but also developing local value chains. They increasingly use digital platforms to facilitate their sales and purchases from producers, i.a. by working directly with Nigerian farmers. In this way, the presence of large chains contributes to innovation, standardisation and improvement of customer services.
The following is an overview of key local players, their operations and market position.
1. Retail Supermarkets Nigeria (RSN). The company operates under the franchise of the South African Shoprite retail chain and is owned by Ketron Investment Limited (Parsianas Group), a Nigerian company, since 2020. It has 25 supermarkets in twelve of the country’s states and the Federal Capital Territory (Abuja). With 20 per cent of the retail market, RSN is the largest local supermarket chain.
2. Artee Group. The company operates under the franchise of Dutch chain Spar, has 14 branches across the country and is the biggest player in Nigeria's economic capital, Lagos. The company’s sales in 2023 exceeded €200 million.
3. FoodCo is Nigeria's third largest retailer with 18 outlets in the south-western states of Nigeria including Lagos, Ibadan and Abeokuta. Its shops offer a wide range of groceries, home appliances and household products. The company also operates fastfood restaurants and recreational facilities. FoodCo has its own manufacturing facilities that help reduce production costs and maintain competitive prices. In 2021 and 2022, the Financial Times listed the company as one of Africa's fastest growing companies.
4- Marketsquare is a relatively new chain in the market, owned by Benue Investment and Property Company (Nigeria). It includes 36 small supermarkets in 12 southern states, including Lagos, Abuja, Kaduna and Port Harcourt.
5. Justrite Superstores – a leading chain of family-owned convenience stores. It operates mainly in Lagos and neighbouring states and has annual revenue of $6 million. The shops focus on day-to-day supplies, clothing and home appliances at affordable prices, catering to urban and peri-urban consumers. The company actively supports local farmers by sourcing agricultural products from them.
The advantage of small and medium-sized chains is their location in close proximity to residential areas, the so-called neighbourhood and convenience shops. They focus on meeting everyday needs, including the sale of seasonal products and general merchandise. Their prices are usually lower compared to their larger competitors.
Factors affecting the market dynamics:
1. Import restrictions on a number of consumer goods. In order to encourage domestic production, the Nigerian government imposed in 2015 various forms of import restrictions (outright import bans, ban on foreign currency import credits, ban on imports by certain foreign-owned enterprises, etc.). These measures target i.a. pork, beef and poultry, sugar, vegetable oils, fruit juice, pasta, certain medicines, mineral water, soap, detergents, cosmetics, rice, margarine, footwear, ballpoint pens, etc.
The Central Bank of Nigeria estimates that the country's budget lost $1.4 billion between 2015 and 2019 due to these measures. In October 2023, the Central Bank again dropped the ban on foreign currency import credits, but other restrictions are still in place. More information can be found on the Nigeria Customs Service website.
2. Competition from small sellers. Street markets, vendors and convenience stores offering a basic range of goods remain main competitors for retail chains. According to surveys, 60% of consumers still prefer such outlets for everyday shopping.
3. Poor infrastructure, logistics and power failures. In Nigeria, blackouts are not uncommon and goods are transported mainly by road, with the railway network expanding very slowly. As a result, many large chains have problems transporting and storing goods. Rapid urbanisation and expansion of retail networks further exacerbate these challenges. The World Bank estimates them to be responsible for 16% of lost revenues in Nigeria, while the African Development Bank attributes 25-30% of the cost of goods to transport risks alone.
4. Development of e-commerce. Over 90 million people in Nigeria have access to the internet. Not only big players but also small retailers are beginning to shift to online sales as a way to expand their customer base. Local online marketplaces Jumia, Konga and PayPorte became particularly popular in the wake of the Covid-19 pandemic and continue to gain momentum. Nigerians are also actively using social media sites such as Instagram and Tik Tok for informal shopping. Online shopping is projected to grow at a rate of 20% annually over the next 5 years to reach $29 billion by 2025.
5. Complex regulatory environment. The retail sector in Nigeria is governed by a large number of standards, licensing requirements, tariffs and taxes at both national and local levels. PwC estimates that because of this, companies have to spend on average one-third of their working time on related administrative matters. And the need to comply with the standards of the National Agency for Food and Drug Administration adds an average of 30 per cent to the original cost of the product.
6. Changing buyers’ preferences. Already, about 60% of the Nigerian population is less than 25 years old, which pushes the market to adapt to youth tastes for food and fashion. On the other hand, there is a discerning approach of the affluent middle class, which is increasingly willing to pay for quality products from recognised international brands, ethical and eco-friendly industries.
7. General economic conditions. As a result of the sharp depreciation of the Nigerian currency in the 2020s, a number of multinational corporations, primarily from South Africa, suffered serious losses and had to leave the market. Supermarket chains Shoprite and Pick'n Pay sold their stakes to local owners, another South African chain Massmart completely closed its Game shops, ready-to-wear retailers Mr Price and Woolworths left the country.
Overall, the retail industry in Nigeria shows potential for sustained growth due to urbanisation, rising incomes and changing consumer choices. However, import restrictions have so far hindered the entry of a number of key consumer goods into the country, causing retailers to rely heavily on local producers. There are also significant infrastructural, regulatory and macroeconomic challenges, resulting in higher product costs, delays/disruption of deliveries and direct losses.
Penetrating supply chains will become promising for new out-of-region suppliers once the current import bans are finally lifted. Entering the market requires a cautious, selective approach, wh ere preliminary probing of demand, trial deliveries and safeguarding against as many risks as possible are a must.
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