LAGOS: The appetite of Nigerians for modern retail is growing faster than developers can build space, with international brands clamouring for places they can open stores.
"Everybody is talking about the size of Nigeria's population and the increasing income levels," Bruce Layzell, KFC's general manager for new African markets, told How We Made It In Africa. But it was not this growing consumer base that excited him most – it was that "Nigerians are discerning in their tastes, have their fingers on international trends and expect the very best international markets have to offer".
This development has taken place over the past ten years as incomes have risen and a more demanding middle class has emerged. These consumers "demand a different shopping experience in a more formal retail environment" according to Michael Chu'di Ejekam, head of real estate in Nigeria for private equity company Actis.
Fashion brands are among those leading a successful charge. For example, Kamal Mansour, franchise owner of stores including Hugo Boss and Mango, claims that the Mango store in the Palms mall in Lagos is among the top ten globally for sales per square metre.
Ejekam added that brands such as Tommy Hilfiger and Salvatore Ferragamo were also exploring options in Nigeria. "This is the next wave of retail development," he said.
But while Mansour is ready to open more stores he cannot find appropriate locations. "The problem is the space, not the market," he said. Ejekam confirmed that, saying "Lagos alone has over 20m people, but there are only two major malls. The city could easily take 20 more malls."
Accordingly, Actis has plans to develop at least three new malls in the near term, while Resilient Africa, a real estate company from South Africa, is in a joint venture to develop as many malls as it can as quickly as possible.
"The potential of this market is unlimited and it is relatively immature," Japie Swart, Resilient Africa's chief operating officer told BusinessDay. "We see big international retailers coming here in the next two to three years."
His colleague, project manager Matthew Chency, explained that the venture's current development, at Effurun, midway between Lagos and Port Harcourt, was about tapping the opportunities outside the major cities.
The problems of poor infrastructure and erratic power supply have not deterred international brands. "If you wait for those [problems] to be solved, the cost of establishing a footprint here would be 100 times what it is today," said Robbert de Vreede, Unilever's vice-president for brand-building in Nigeria.
Data sourced from How We Made It In Africa, Business Day; additional content by Warc staff