Nigeria’s retail sector is growing fast. Facades of western style consumerism are becoming more commonplace with us: mega malls, online shopping, and buyers willing to pay extra for higher quality, better packaged products. There’s also the talk of an emerging middle class with money to spend and a taste for world class products. It certainly seems like a great time to be alive in the retail space.
Business is never plain sailing
For every sweet sounding story of success, there are sobering tales of failure as well. Stores have gone belly-up in large numbers, and a good fraction of existing ones struggle to stay afloat. There’s growth, but there are also pitfalls to be overcome. If you’re planning to set up shop as a retailer, you’ll need to know how best to proceed.
Here, we’ve brought together some of the best business advice from Nigeria’s top retail executives. These tips have been factors in the success of the businesses run by those who share them, so you’ll do well to have a look.
Give people what they need… and something extra
This often repeated idea still goes unheeded by many entrepreneurs. It’s a foolhardy thing to not consider the market you’re looking to sell to before jumping into it. Successful businesses are founded upon, and revolve around meeting a real public need.
Take Neo Cafe, for instance. It’s Nigeria’s biggest coffee shop chain, and serves coffee to what is a target market of middle class Nigerians, returnees, and expatriates. But its founders, Ngozi and Chijioke Dozie, didn’t create it because they wanted to own the first starbucks-like shops in Lagos. They set up because they saw a market for it, and realized that this market wasn’t being served.
The brothers also knew that they needed to have something extra to pull more people in, so they made their cafes double as cool spaces for monopreneurs and remote workers. Besides the coffee, customers get free wifi, free power, and a work friendly environment.
“We were always skeptical that Nigerians would take coffee, but what we’ve always tried to replicate was that nerd space… It wasn’t just ‘come and drink coffee’; it was ‘come and hang out, free wifi, meet people. We were really offering that space, and coffee would be the catalyst for it.”
— Chijioke Dozie
The lesson? Give people something better than the norm, something that’ll draw them in and keep them loyal. Have a great product, a wonderful brand experience, and maybe a little extra on top of all that.
Finetune your service
Rafael Afaedor certainly knows a few things about chiseling products to match consumer tastes. As a former CEO of ecommerce company Jumia and founder of the online supermarket Supermart, he’s overseen the chipping and chopping of multiple services.
Afaedor says that research is key to product development; but then he points out that a lot of businesses get their strategy wrong in this sphere. He’s a big critic of simply targeting fractions of Nigeria’s huge population. The approach of selling to “10% or 1% of 190 million people” doesn’t work; he reckons that it masks a potentially hard hitting reality.
“One of the mistakes I’ve seen people make is to think that they have a product, and everybody is a customer of the product. I think that’s wrong.”
— Rafael Afaedor
He has what he believes is a better way to fashion (and refashion) your products.
“What you want to do is to force yourself to tailor the product to a specific individual (your ‘ideal’ customer). What that forces you to do is to ask the right questions. If you don’t do that, you might think everybody is going to buy it.”
Adjustments to the product can also be made as active interaction with the market goes on. Afaedor notes this as well.
“No amount of research will make up for what you actually learn when you go to the field itself… You’ll learn quickly (there), you’ll iterate things, and keep improving.”
Plan pricing with profits in mind
Fixing prices for the products you sell shouldn’t come down to selling at a lower price than your competitors. That’ll be a race to the bottom, a strategy (non-strategy?) that only guarantees ever thinner profit margins.
Bukky George thinks this too. Having headed retail pharmacy company Healthplus for almost two decades, she’s learnt much from her own experience with product pricing models. George is firmly in the camp of planning markups in percentages beforehand, and not hurriedly forcing prices down because competitors are pegging theirs lower.
“I know a lot of us compete on pricing. This shouldn’t be. You need to check your cost of sales. For us, if 100% is turnover, 65% of it will be cost of sales. Your operational expenses should not be more than 15-20%; wages are part of that. You’ll be left with about 15%. You deserve 15%.”
— Bukky George
And if you can’t make the 15%? George’s answer is quite firm.
“Sell your business, and go on to do what pleases you.”
While her advice applies specifically to retail pharmacy, it’s also useful for small and medium sized businesses as well. Having a preset realistic pricing system keeps your business from being tossed about by influences you can’t control.
Build an appealing brand
Honey Ogundeyi, founder and CEO of online fashion store Fashpa, is big on branding. This isn’t a surprise, considering the fact that she was a global brand manager at Ericsson earlier in her life. But she reminds us that branding is important because it’s what stands a business out from the crowd of an industry.
Ogundeyi explains that new enterprises should have a clear idea who they’re targeting, as a first step. This helps them communicate with their potential customers in a way that they’ll appreciate.
“You can’t have a fine brand if you don’t know who you’re talking to. It’s really difficult to talk to everyone at the same time. We (Fashpa) were focusing on women, and we followed popular culture.”
— Honey Ogundeyi
She offers more tips she believes will help businesses present its brand more consistently to the public.
“Our focus has allowed us to draw that into everything we were doing. Everything communication, from your newsletter, to your social media, to even how your invoice appears – it’s all part of the brand.”
Have a comprehensive HR management system
When children’s clothing company, Ruff ‘n’ Tumble began to expand, its founder, Adenike Ogunlesi, knew that she had to get the business more organized. A big part of this was recruiting staff, defining their roles, and ensuring that there were ways to regulate and reward them.
“We needed staff hand books that explained what your benefits are, and we needed job descriptions.”
— Adenike Ogunlese
She got these in place, as well as a monthly evaluation system which records their work activity.
As for the often troublesome task of keeping staff motivated, Ogunlesi suggests that employees should work with their staff to integrate the company’s goals with theirs.