In 1982, newlywed Sola Sun-Basorun decided to chase her lifelong dream of setting up a supermarket. With the humble proceeds from her wedding and the support of her husband, Adegbenga Sun-Basorun, she quit her job as a university librarian and expanded her fresh fruits and vegetable side business into a proper supermarket, albeit a small one.
Today, 40 years after taking the plunge, Sun-Basorun’s venture, FoodCo, has grown to become one of the largest supermarket brands in south-west Nigeria, outside of Lagos, and is ranked among the top five supermarket chains in the country. From one store, the company has expanded its portfolio to become an omnichannel retailer with interests in supermarkets, quick service restaurants, manufacturing and entertainment.
However, FoodCo’s journey was anything but easy. After almost two decades of stable growth, the company ran into major headwinds that almost led to its collapse. The first five years at the turn of the millennium proved to be extremely difficult, leading to the closure of about 80% of the company’s operations.
Ade Sun-Basorun, current chief executive officer and son of the founder, speaks about the experience. “What we are seeing today is the second generation of FoodCo. Between 2000 and 2004, we had to shut down all the outlets save for the oldest in Bodija, Ibadan. The business lost all its capital and things were so bad that a day with 10 customers was considered a good day during that period. That was, by far, the darkest period in our existence, ranking even higher than what we have had to deal with from the fallout of the Covid-19 pandemic.”
The years from 2005 to 2008 were critical to FoodCo’s resurgence. That was when the single surviving store began to claw its way back up. “From 2004 to 2007, it felt like life was coming back into the almost dead single store as business started to pick up again. By 2008 and onwards, the business began to thrive again.
So how did FoodCo weather the storm? Sola Sun-Basorun introduced several strategic measures that helped steady the ship. One of these was negotiating credit lines with vendors which helped free up the cashflow for day-to-day operations. Almost all profits were reinvested into the business and there was an incisive restructuring of internal processes, including audit and controls, human resource development and board governance. By 2010, FoodCo opened another outlet.
That experience would provide the springboard for a much-needed reset that enabled the company successfully reposition itself into one of the success stories of Nigeria’s retail sector. In 2020, when most sectors of the economy were grappling with the disruptions of the Covid-19 pandemic, FoodCo expanded its footprint with six stores, employed more staff and was named one of the fastest growing brands within the category.
Diversifying the offering
Sun-Basorun says that the company owes its growth to its ability to adapt to Nigeria’s constantly changing business environment. “One of our strongest attributes is our flexibility and willingness to continually adapt to changing market needs through focused leadership, innovation and a customer service orientation. Even as one of the pioneers of modern retail in Nigeria, we have continued to challenge ourselves to evolve with the times. For instance, we are one of the first businesses in the country to successfully experiment with the co-location concept, creating a one-stop-shop for customers to shop, eat and play.
“In response to the typical dearth of quality products in neighbourhood stores and driven by the need to bring modern retail closer to underserved communities, we introduced FoodCo QuickShops, a chain of fit-for-purpose neighbourhood outlets that stock quality grocery, personal care and home essentials. So, when customers run out of personal care items at home and need a quick fix, they are sure of the same quality products from the QuickShop like they would get in the regular mall.
FoodCo continues to make significant investments in growing the Nigerian modern retail sector. It actively supports the MSME community and partners with a growing list of small businesses and local manufacturers who it provides with access-to-market opportunities leveraging its vast network across the south-west region of the country. The company also organises an annual #BigBreakWithFoodCo competition targeted at budding entrepreneurs between the ages of 18 and 35 years. Participants are offered free business coaching while winners have opportunity to stock their products commission-free across FoodCo outlets.
In 2018, FoodCo established a two-year fellowship programme geared towards training top talent. It recruits MBAs and post-graduates interested in building a long-term career in retail and puts them in the middle of real-life business leadership operations.
Moving into the future, FoodCo is looking to sustain its growth trajectory with multiple expansions planned for Lagos and across other major cities in south-west Nigeria.
The company also intends to expand its manufacturing arm. Currently, its Sunfresh bread brand boasts six variants while its ice cream comes in 16 flavours. Sunfresh premium water, launched last year, has also become a strong brand within the space.
Demand for formal retail slowly increasing
The desire for formal retail is growing in Nigeria as consumers have gotten a taste for the more comfortable environment and ambience this type of shopping offers, Sun-Basorun said in an earlier interview with How we made it in Africa.
But he doesn’t believe retailers need to be in a large modern shopping mall to offer this. Other models – such as smaller centres and strip malls – are coming to market, offering both proximity and variety to shoppers, he explains.
“We are starting to see business scale within the retail sector and formats are changing. Eight years ago, we saw a proliferation of 30,000m² Grade A malls.” But few retailers can profit at the price point of the international malls, he explains. “It is a credible format and an exciting development, but we need diversity. You can build your own centre with financing, land and structures that meet your needs.”
Sun-Basorun says the penetration of modern retail in Nigeria is still small – less than 10% of the total market. The majority of sales are through informal and semi-formal channels.
“However, there is a sizeable gulf between demand for more formal shopping and supply. The industry will respond to this in the coming years and competition will grow. It creates significant opportunities for retailers like us.”