As Woolworths Plans Its Exit From The Nigerian Market






The announcement that South African retailer Woolworths is set to pull out of Nigeria due to high rental costs and supply chain challenges caught retail analysts unawares.
This is against the backdrop of rising trend of retail mall constructions in Nigeria, the type of locations preferred by Woolworths and other such retail businesses including Shoprite, Game etc.




Following the success of The Palms Shopping Mall in Lekki- Lagos, other malls have since sprung up in other locations in Lagos namely Ikeja Shopping Mall, E-Centre Yaba, Galleria Victoria Island and also in other towns such as Abuja, Enugu, Ibadan and Benin.




In a statement, Woolworths which already has three retail outlets in Nigeria said “The Nigerian business was unable to sustain a compelling product and value proposition which represents the brand well, and meets the needs of the Nigerian customer”.




While this may seem like good news for the fledgling indigenous fashion industry in Nigeria, it does not however paint a good picture for the county. Officials of the Federal Ministry of Trade & Commerce and other government agencies have been touring the world in search of foreign direct investments (FDIs). It does then appear that the competitive environment in Nigeria is still not very suitable. If Woolworths closes shop, they would take with them their fashion retail operations experience which would have impacted on the local retail industry in Nigeria. There will also be job losses and decrease in nation brand equity. Such negative business news will erode whatever little gains that may have been made by the recently launched ‘Fascinating Nigeria’ repositioning campaign. This is because no nation can claim to be a favourite destination for trade and investments if foreign businesses in such a country are closing shop as a result of unfavourable competitive business environment.




Government should look into some of the concerns raised by Woolworths and other businesses operating in Nigeria. For example, what is the reason for the high rental costs? Could this be as a result of high interest loans secured by the mall developers and the need to recoup back within the shortest possible time as the political and economic terrain continues to appear unpredictable?




Government should also do something about supply chain challenges. Woolworths imports the bulk of the goods it sells from abroad. Reports in the past have shown the difficulties faced by importers in clearing their goods out of Nigerian airports and seaports. The challenges include both administrative bureaucracy and multiple taxation. There is also the nightmare of transporting the goods out of the ports in Apapa and the traffic gridlock caused by bad roads.

Addressing these challenges will help to enhance the competitive business environment in Nigeria and make the market more attractive for both local businesses and foreign investors.

Story• Their stuff are simply just too expensive for the average Nigerian even more expensive for the majority who are bactually elow average• Or they expect the government to pay their rent for them?? They should have done their homework well before coming here•

But it is still bad news. Maybe they did not do their research as you suggested, but the factors they listed that made them decide to finally shut their doors are still the same factors that have made businesses in Nigeria not to reach their full potential. Nigerians are very disciplined and hard working people that are capable of creating business that can surpass woolworths but what encouragement are we getting from our government. In another blog, I read of the CEO of Massmart Africa (Walmart Africa/Gamestores) saying they wanted to close down their two stores in Nigeria due to high rent, low power supply, delay in clearing of goods at our ports, bad roads to transport goods, bribery and corruption at every corner and other bad stories, which is the same factors that is killing small businesses in Nigeria. But let me shock you, the CEO said and I quote him some Nigerian politicians and the Minister of Finance went to Bentonville which is the headquarters of walmart and personally pledged to protect walmmart's business interests in Nigeria. These are the same people shouting entrepreneurship and YouWin. They are pledging to protect foreigners. Who is protecting the market man or woman who they come to for votes during elections? The sooner we wake up and hold our politicians and government accountable for the mess that Nigeria is, the better for all of us.

bye

Good riddance

am coming to read it, space booked, all the same, i thank God am coming up on nairaland. God bless Nigeria

am waiting for mtn too

I dont know what the F*** they are talking about in this thread, all i know is my comment made first page.

Nawa oooo... Seasonal movie script

Its not easy to make 1st page in this harsh weather..Allah be praised

Woolworth shutdown in Uk about 6yrs ago so.......CIAO

They better review their businese model, because Nigerians spend heavily on clothes.

hmmmmm

Im so sure PEP and Mr Price will be under immense pressure as well. Foreign clothing outfit is not meant for Nigeria. Large no (poor) of nigerians buy 'bend down' or frm emeka's shop. People also send clothes to their own from abroad. And generally we love our traditional wears, unlike south africans that get all their wears frm those stores.
It is not everything that will sell in Nigeria!

this pics says i all............bye guys..see you in south Africa

Make una go na. We go still buy am for OK Boutique at a lesser price. Bon voyage.

Jimmy Boy: They better review their businese model, because Nigerians spend heavily on clothes.

I dont agree with this statement, having seen the way south africans buy clothes in these shop.

Probably easy for them to do since -so i have learned on Niraland - Nigerians travel a lot to Ghana.


If Nigerians get sense, they should stop going to Ghana.

Clearly an inability to customize their business plan to suit the Nigerian environment.

Most likely, the biggest operational cost came from their massive retail space at the Palms (which is the most expensive retail mall space per square ft. in Africa) with outrageous service charges (diesel etc). They insisted on being in a pre-fab fancy mall rather than lease a stand alone structure for a fraction of the price. When in Nigeria, be ready to adjust your model to suit the operating environment.

[quote author=braine]Story•is not suprising, in a country where there is no middle class, is either lower class or upper class & is only 00.01% (ELITES) that controls the wealth of the nation surely they can't survive

Their goods are too expensive the first and the last time I went to one of their outlets I emptied my pocket on few purchase that I would have bought at 35% less than their price. Make them they go joor.

Okay!!!!!!!!!!!!!!!!!!

Hmmmnn..they're about to make some people jobless

Okirika, bend down boutique, I hail ooo

Litmus: Probably easy for them to do since -so i have learned on Niraland - Nigerians travel a lot to Ghana.


If Nigerians get sense, they should stop going to Ghana.

up till now you still don't have sense WHY WHY WHY?!!!!! What have Ghana got to do with dis matter?

will we miss them I doubt

mcdokwe: will we miss them I doubt

lmao

They don't really sell nice clothes. U need to see their suits and pants. Very old fashioned stuffs. I wouldn't take their shoes for free. Though d rent in d malls are crazy, u need to sell nice clothes @ reasonable prices. How u g o dey sell baggy pants and shirts n expect ur biz to move.

I have visited their stores at the Palms. The truth is most of what they have there is low quality and quite expensive. I don't see any reason why i would spend money on those low quality garments they put up for sale. So i say bye bye to Woolworths.

googlepikin: up till now you still don't have sense WHY WHY WHY?!!!!! What have Ghana got to do with dis matter?

If you had that sense that i have none of you'd know what i meant. Learn to extrapolate and you too can begin to glimpse future trends...

After I received my first salary I was feeling like a big boy and stormed woolsworth...didn't spend 3 minutes, I ran out! *covers face*

Yepa Jonathan has killed their business oh!