globe retail outlook data

 

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Nigeria

The Nigerian retail sector is currently mapping its way into a recovery following the economic recession of 2015/2016, which brought about a huge contraction in market activity and purchasing power. The economy’s downturn highlighted the unnerving reality that the Nigerian middle class was ill equipped to withstand the consequences of an economic downturn as retail market activity contracted significantly and has yet to record any significant improvements.

The history of formal retail in Nigeria is one birthed in strong investor optimism in the early 2000’s. The formal retail sector recorded exponential growth in supply, from 30,000m² in 2005 to over 300,000m² in 2018. The core markets of Lagos and Abuja record the largest square meterage of formal retail and enjoy the more varied options of both local and international retailers.

In 2014, a shift in interest was noted with a focus on second-tier cities along with a renewed strategy to continue expanding in Abuja and Lagos. Gaining first movers advantage was a key driver for developers exploring retail malls in the smaller cities. Secondary markets of Delta, Enugu, Kwara, Ibadan and Port Harcourt saw the introduction of formal retail, however, further investments in these locations have slowed.

Leasing activity across the core and secondary locations slowed at the turn of the recession and has only picked up slightly since. Malls that were delivered at the start of the economic downturn experienced huge difficulty in regards to leasing spaces as retailer interest declined significantly. Furthermore, existing malls operating below full occupancy were forced to adopt strategies to prevent tenants from exiting malls, which became the norm in the market.  The foreign exchange crisis coupled with stringent capital controls, instituted by the Central Bank of Nigeria brought on serious challenges for existing and prospective tenants, especially as rents more than doubled and retailers struggled to raise Letters of Credit (LCs) to buy new stock. However, the relative stability in the foreign exchange market over the past 12 – 24 months has brought renewed access to raise LCs by big retail brands. Asset managers are still tasked with devising strategies to prevent further loss in value for retail investors as opposed to their original mandate of maximising returns on investments.

Although the retail sphere in Nigeria is anticipated to remain challenging, given current market dynamics, the outlook is not entirely bleak. On the positive side, some investors remain cautiously optimistic as property owners and retailers continue to devise newer or underutilised concepts to entice tenants and/or consumers. With increased focus on leisure retail, i.e. cinemas, children’s play areas and arcades, formal retail establishments can cultivate growing consumer demand for these schemes.

Our Top Tip For
New Arrivals

Visit Ikeja City Mall in Ikeja and The Palms in Lekki for the best retail experience in Lagos. For authentic local purchases head out to Balogun Market in Lagos Island.

Currency

Nigerian Naira (NGN)
EUR €
USD $
GBP £

Language

Yoruba, Igbo and Hausa
Hello: Bawo ni (Bah-woh-nee), Kedu (Kay-do), Sannu (Sah-nu)
Thank you: Ese (eh-shay), Imela (e-mehla) and Nagode (nah-go-day)

International Dialing Code

+234

Time Zone

UTC +1

Cost of a Pair of Jeans

7,000.00 NGN

Cost of a Cup of Coffee

500.00 NGN

Cities in Nigeria

Contact Us

Bolaji Edu
6th Floor, ED Building, 47 Marina, Lagos
+234 812 628 7751 | bedu@broll.com.ng