- Foreign Investors Interested in Nigeria’s Retail Market
Broll Nigeria, a real estate services firm, has published a report which indicates the interest of foreign investors in Nigeria’s retail market remains strong despite the uncertainties that wane investors confidence in the market.
The firm, in a report analyzing the retail sub-sector in the fourth quarter of 2018, said international brands’ interest in the country has not decreased even with the low purchasing power of consumers.
The report stated that 2018, relatively low to 2017 and 2016 in terms of sales, was a challenging year for the retail market, adding that many Landlords in the market had been increasingly open to tenant-friendly leasing options in an attempt to drive occupancy levels, while tenants have had to re-strategize their businesses to stay afloat and continue operating within malls.
“These brands were mostly interested in franchise agreements with experienced local operators,” the report stated.
According to the report, as the year progressed, the frequency of enquiries for formal retail space increased, notably in the fashion and accessories, as well as food and beverages, with enquiries hovering around 30 to 60 square metres from both local and international retailers. Food and beverage record the highest level of concluded transactions in 2018.
The report said, “2018 saw the introduction of a number of international brands such as Pinkberry, Krispy Kreme and Pizza Hut. Outside of food and beverage, in other segments such as beauty, fashion and accessories, very few international brands entered the market.
“Leisure retail gained significant traction in 2018 with the consolidation and relative success of brands such as Rufus and Bee, Upbeat and the various Filmhouse cinema additions in the market. Landlords have become more sensitive to the fact that food and beverage offerings are not a strong enough influence to increase footfall and dwell time at malls thus a more diverse tenant mix with child-friendly offerings for example have been perused.”
Also, Broll Nigeria report noted that in 2018, retailers implemented creative means of running their businesses within other outlets and not just in malls; “This ranged from aggressive marketing to consolidate brand loyalty as well as exploring cost effective means of operations, for example locally-sourced goods as opposed to 100 per cent importation of goods. Tenants that were successful in adopting cost effective strategies as well as brand distinction in the market were able to retain occupancy within malls and expand their footprint despite stagnant purchasing power and crawling consumer confidence.”