Interview: Olaide Agboola
What potential do you see for developing the retail market post-recession?
OLAIDE AGBOOLA: Since the economic recovery beginning in the second half of 2017, the retail and real estate sectors are attracting more interest from international investors again. The Nigeria Autonomous FX Window, launched in April of that year by the central bank, was also very much responsible for this recovery. However, the retail sector took a hit during the recession, with several players putting projects on hold. Moving forward, the retail challenge in Nigeria will centre around the ability of investors to provide an affordable experience to customers, while ensuring good revenue streams for retailers. In addition, obstacles will remain in developing retail infrastructure when it comes to finding land and getting the right approvals and titles; however, public-private partnerships, like those being encouraged by the Lagos State government, offer a good way to attract private sector participation and funding.
What are the benefits of district malls?
AGBOOLA: District malls such as the Maryland Mall in Ikeja are especially advantageous in a country like Nigeria. By focusing on smaller assets in these areas, developers can also focus on bringing retail infrastructure closer to customers. It is important for foreign investors to understand that despite the fact that there is huge potential in retail, a strategy focused on opening big malls and retail complexes might not be suitable for the local market. Hence, investors need to adapt their strategy to the market, where urban land is scarce and people’s disposable incomes are still recovering from the recession.
How can mall developers and retailers provide a better experience for their customers?
AGBOOLA: A key factor affecting customer experience is a mall’s tenant mix, with retailers being the main reason why customers visit a mall. However, the ideal mix is determined by a delicate balance of location, demography, economy and customer profile. What remains a constant feature in sustainable mixes is that each demographic is well catered for, especially in terms of entertainment. A focus on tenants that match Nigeria’s consumer profile would improve the customer experience greatly.
By creating something that everyone in the family can enjoy, retail centres can make themselves the default choice for Nigerians who are thinking of what to do and where to go. By providing fun physical activities like roller skating, bowling and play centres, the youngest family members are attracted to the mall, a group which possesses significant benefits for the sector given that family visits revolve around them. Young adults, meanwhile, can be targeted with restaurants, bars, cinemas and innovative activities such as virtual reality stands. In short, retail centres need to engage customers in a unique way.
How do you view the challenges presented by gross capital formation for the economy?
AGBOOLA: Gross capital formation is a major issue for the economy. Nigeria struggles to attract private foreign capital, especially in a context where the private sector is competing against the government for it. As a consequence, deals securing over $20m are still rare. In addition, many local businesses lack the most basic corporate governance standards to attract foreign capital, especially when it comes to finance and accounting. Furthermore, in terms of doing business, Nigeria presents a number of challenges due to inadequate infrastructure and heavy bureaucracy. Together with a lack of definitive industry data in circulation, investments can be more difficult to evaluate and justify. However, beyond these challenges lies the significant opportunity and value-creating potential of the African market.
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