South African retailer Shoprite has opened its first store at the end of 2005 in Lagos at The Palms Shopping Mall and is looking to play a major role in formalising the country's FMCG sector. Jaco Maritz asked Shoprite Nigeria’s general manager, Anton Wagenaar, about Nigeria's business climate and his company's plans for the future.
Please explain your role within Shoprite?
I am the General Manager of Shoprite Nigeria. My main function is to oversee the operations of Shoprite in Nigeria as we expand our store network throughout this country.
What challenges currently face Shoprite Nigeria?
Our greatest challenge is to ensure that we improve our current supply chain (for imports and local purchases) so that it conforms to our own set company standards.
What is Shoprite's strategy for Nigeria? Do you plan on opening more stores?
We are extremely positive about Nigeria and the potential there is for this country to develop into one of the largest economies in the world. The federal government has set a goal for Nigeria to become one of the world's twenty largest economies by the year 2020. We have as a result of this already given our commitment to six developers to open stores throughout Nigeria (i.e. Abuja, Calabar, Kano, Port Harcourt and here in Lagos) – further stores are being investigated.
Shoprite originally started doing business in South Africa. How does Nigeria's retail sector differ from South Africa?
The formal retail sector in Nigeria is extremely small. The Nigerian FMCG (fast moving consumer goods) market is mainly geared towards supplying the informal sector, with very little formal retail sector involvement. With our proposed store roll-out we will change this mindset by ensuring we remain price competitive whilst offering excellent quality goods and customer service.
Regarding the products on offer, does the Shoprite store in Lagos differ much from the ones found in South Africa?
It is imperative that as we expand our store network across Africa and Asia, we maintain our brand integrity. We will therefore always ensure that our product offering (taking different local brands into account) remains the same whether our customers shop in Lagos, Mumbai or Cape Town.
How would you describe the response of Nigerians to Shoprite and its products?
We have over the past two years used similar promotional strategies that we use in South Africa and the other countries across Africa and Asia in which we trade. As a result of this and our ability of being price competitive with excellent quality products on shelf, we have been able to build up a strong brand awareness with our Nigerian customers. We have fully supported locally made products and have since our inception made use of our self designed "Product of Nigeria" labels to create an instore awareness with our Nigerian customers that we totally support Nigeria and its efforts of developing this economy. As a result of this, we are delighted to see that most of our customers are in fact Nigerian.
Who is Shoprite's main competition in Nigeria?
There are a few smaller retailers in and around Lagos (and other major cities across Nigeria), but there are no large supermarkets (like us) that operate in the formal retail sector. As stated earlier, the FMCG market is mainly geared towards supplying the informal sector - we are changing this mind-set.
Have you encountered any significant problems with local suppliers?
We currently have approximately 300 local Nigerian suppliers and 41 local farmers supplying our first store in Lagos. We have seen tremendous support from not only the Nigerian government and the general public, but also from our local suppliers who have appreciated our efforts of promoting their locally produced products. The fact that we have quite a large number of local suppliers supplying our first store in Lagos causes its own set of challenges and we are therefore constantly trying to find ways of improving the supply chain with these local suppliers and farmers.
How has it been dealing with Nigerian authorities?
As a foreign investor into Nigeria, the federal government and its regulatory agencies made every effort to accommodate our concerns by giving advice and support when we opened in December 2005. With the efforts of the federal government to stamp out corruption, any legitimate organisation that wants to invest and operate in Nigeria, will receive their full support and assistance.
Have you, or your colleagues, had any problems with crime or corruption in Nigeria?
As a listed company on the Namibian, South African and Zambian stock exchanges, we do not get involved in corrupt practices. As I stated earlier, we approached the federal government and its regulatory agencies prior to our launch to ensure we comply with every regulation and law. With this commitment we were very well received by the Nigerian government who assisted and supported our efforts of setting up our first supermarket.
What advice would you give to other foreign businesses looking to do business in Nigeria?
The fact remains that Nigeria will become one of the largest economies in the world and it is therefore needless to say that there are tremendous opportunities for foreign investors to develop their business. The federal government of Nigeria has a clear policy of supporting legitimate foreign investors and as such, there are agencies like the Nigerian Investment Promotion Commission (NIPC) that provide the necessary assistance and advice in setting up one's business here. Additionally there are also other regulatory agencies such as the Nigerian Customs Service (NCS), the National Agency for Food and Drug Administration and Control (NAFDAC) and the Standards Organisation of Nigeria (SON) which also have dedicated departments which lend support to organisations operating in Nigeria.
What have been the greatest challenges for you and your family in moving to Nigeria?
For me personally it has not been difficult to settle here as my family and I have been outside of South Africa since 1998 when I was transferred to Shoprite in Zambia. Nigerians are generally very accommodating to foreign investors and are eager to see their country develop into one of the top twenty economies over the next decade or so.
