“Woolworths’s withdrawal from Nigeria, and that of Nando’s, Telkom and others, should not be interpreted as a story only about Nigeria’s challenges, but also about specific problems created by the choices the firms themselves made.”
She added that one cause of Woolworths’s failure is likely due to poor marketing.
“Because South Africa’s retailers are household names at home, there seems to be an expectation that Africans elsewhere will be familiar with the brands. This is not the case. Wealthy Nigerians travel extensively, but their favoured shopping haunts are in the UK and US. As a result, they are more familiar with the down-market Woolworths brand in the UK that went out of business a few years ago than with the more upmarket brand so beloved by South Africans.”
Games also suggested that the layout and ambience of Woolworths shops might have led Nigerians to believe that goods were expensive.
“Cost is an issue with this much-trumpeted new emerging middle class, the bulk of which is at the more unstable end of the definition… Nigerian consumers are brand savvy. If they are going to pay higher prices for goods, they want global brands they recognise; brands that tap into their aspirations. Woolworths, and some of South Africa’s other clothing retailers, simply do not fit into that category. That makes their marketing job more difficult — but not impossible.”
According to a report by Nigeria-based Business Day, Edcon will enter Nigeria with its more cost sensitive brand Jet, as opposed to its brand Edgars.
“We normally go into a new country with Jet‚” said Edcon’s CEO Jürgen Schreiber. “In Zambia though‚ we went in also with Edgars‚ which is working well‚ and then we will go into Ghana next year in the second half with both Edgars and Jet because the market is quite strong.
“Nigeria would be a discount approach and not an Edgars one at this point. We have more learning experience and it’s a little bit more of an easier format,” he explained. “Other clothing retailers have been very successful in Nigeria‚ especially when they work in the discount space‚ so we are comfortable and confident on the Jet side.”
A challenge for retailers in Nigeria could be that there are only a few malls available. “There are [currently] probably five malls throughout Nigeria; malls as we would recognise a mall,” Marshall told How we made it in Africa. “The Nigerian market to date has working informal markets and department stores that are sort of standalone Nigerian traders. They are starting to get the feel now for malls and there is a massive growing middle class in Nigeria… So the demand for more formalised, call it Western modern shopping, is massive.”
Games pointed out that the current handful of available malls in Nigeria is not enough to change the shopping habits of the consumer masses. However, she added that as more malls are constructed, more people will get a taste for them.
“Companies investing [in Nigeria] have to understand the minutiae not just of the risks and challenges but of the market, the culture and the consumers. Models have to be constantly fine-tuned and adapted… But it is glib to blame a country for a company’s failure to make an investment work rather than the firm’s own strategies, unsuitable models, poor choice of partners and so on,” Games concluded.