Wednesday, April 09, 2014

The Price is Right

 South African grocer Shoprite and Wal-Mart’s Massmart Holdings are opening stores in Nigeria's second city of Kano. Amid signs proclaiming "lower prices you can trust", Kano consumers can wheel their carts between shelves replete with commercial brands from across the globe in a brand-new, air-conditioned Shoprite supermarket, anchoring a larger $85 million shopping mall development in the city. The mall is designed to house 85 shops and will be among Nigeria's biggest. The power plant standing alongside the mall building - capable of producing 6,000 megawatts - is testimony to another challenge: guaranteeing uninterrupted electricity in a country whose power shortages are notorious. In the coming weeks, Massmart will join Shoprite by opening in the same Ado Bayero mall, named after the local Kano emir.

"I always want to be bold enough to say, you can't be in Nigeria without being in Kano," Massmart Holdings' Africa Director Mark Turner told Reuters, “ The risk reward is there," added Turner, whose company operates in 12 African states. Nigeria, along with Angola and Kenya, is a strategic target market for the Wal-Mart subsidiary.

Bombings and shootings by Boko Haram militants killed at least 185 people, mostly Muslim civilians, in Kano in January, 2012. Explosions in July last year killed 11 people, and police and military roadblocks are now a feature of life in the city. At the mall armed, uniformed guards search vehicles - opening boots, checking the underside for explosives with mirrors - and frisking all shoppers is a sign that this particular mall location faces unusual security challenges somewhat more than your customary shop-lifter.

Africa’s expanding population rapidly approaching one billion includes an emerging middle class of consumers eagerly embracing Western brands, products and lifestyles.

"Africa is brimming with potential for global retailers," consultancy A.T. Kearney said in its first African Retail Development Index report issued last month, which ranked African states in terms of their attractiveness for retail investors. It placed Nigeria, Africa's most populous country with 170 million people, second on its list, citing its rapid urbanization, youthful population and rising middle class. But it ranked tiny Rwanda with its 11.5 million people, first, for its economic reforms and business-friendly agenda.

In a 2013 report, Renaissance estimated Kano State's economy at $17 billion, equivalent in size to the economy of Botswana. Retailers like Shoprite had "clearly recognized the size of the market and the demographics," said mall developer Hayatu-Deen. "Nothing succeeds like success," he said.

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