Why Modern Retail Is Growing Despite Tough Economic Cycle

Despite the tough economic cycle and declining consumer purchasing power, Nigeria’s modern retail sector has continued to show remarkable resilience. This is according to a recent Euromonitor International report which revealed that the sales value of supermarket chains in the country surged 24 percent in 2023.

The evaluation comes at a period when petroleum subsidy removal and the devaluation of the naira have led to an 18-year high inflation rate of 28.8 percent.

Speaking on the prospects of modern retail in Nigeria, Funmi Aiyepeku, Head of Innovation, Growth and Business Transformation, FoodCo Nigeria, expressed confidence that the sector will remain relevant in spite of the current challenges.

She said: “The recent report by Euromonitor underscores the criticality of modern retail in driving economic recovery and in cushioning the effects of a rapidly declining disposable household income. Therefore, stakeholders within the ecosystem must brace up to ensure that the sector thrives and is well positioned to offer respite to a consumer class that is feeling the pressure of the tough economic cycle.”

Explaining the factors driving growth within the sector, Aiyepeku continues: “A key driver accelerating the growth of organized retail is the accessibility to competitively priced goods. Consumers can save between 8-15% by shopping at supermarkets versus the open markets where vendors typically round up prices to avoid dealing with finding change for cash transactions.

“For budget-conscious shoppers looking for seamless and convenient payment options, modern retailers are a straightforward solution because they offer a variety of payment channels ranging from bank transfers to card payments. Accordingly, customers do not need to bother with having cash when they need to shop neither do they need to patronize Point of Sale (POS) operators which come at an additional cost per transaction.”

“Additionally, the rising cost of transportation has made it imperative for consumers to consolidate shopping activities within locations stocking a wide assortment of goods under one roof. As a major retailer with an extensive product range, FoodCo enables this efficiency for shoppers,” she opined.

Established in 1982, FoodCo is a diversified consumer goods company with interests in retail, quick service restaurants, manufacturing and entertainment. With 21 outlets spread across Lagos, Ibadan and Abeokuta, the company operates the largest supermarket chain brand in South-west Nigeria, outside Lagos. In addition, it is one of only two omni-channel retailers in the country.

FoodCo was listed in the FT annual list of Africa’s Fastest Growing Companies for the consecutive years 2021 and 2022.