Let’s start by clarifying one fact, The retail giant is “not coming”, they have been here since 2011 according to their website. They own a majority stake in “The Group” owners on Game. So, we can safely say they have been surveying the land for a good time. Enough to see that it is flowing with milk and honey. I feel very strongly on this matter and this is sharing my 2cents!
When the topic comes up, following the announcement about 2 weeks ago, I always start by asking, do we really need FDI to run a mega supermarket in Naija? What happened to my Igbo brothers? It really breaks my heart that it seems this is what we have become despite our strong entrepreneurial and trade prowess. Then I’m told, “but Shorprite, Spar, Goodies have been here…” Well yes, but I really did not consider them a threat and I was eagerly anticipating the exponential growth of brands like Ebeano, Tonyson, Addide, Cherris etc. I remember the first time I went to Ebeano following the opening of their Admiralty branch, I was so happy, so excited that finally a financial institution is finally trying to help grow local home-grown businesses and invest in the mostly non-existent organised retail sector (My assumption is that they got financing for the growth). I thought this will not be a one-off but alas… I think I only heard of one more expansion after that and all within Lekki.
If Walmart was coming to partner with / invest in a local brand and take up stake, I wouldn’t be so bothered. Infact, I will be quite happy because that will mean growth of a local brand, knowledge transfer and some local control. What really bothers me is that it seems they do not have any strong competition on ground unlike their entries into markets like Kenya where they have faced a serious amount of difficulty due to strong giants like Nakumart, Uchumi, Navivas and have just managed to open one Game store this year. Lack of this kind of competition really put us in a vulnerable place.
Also, it seems Walmart is targeting the middle class in Lagos. According to the Governor of Lagos State, there are 4 million people that fall into that bracket which is huge but my question is, is Walmart a “middle class” brand? Hmm…! Rumour has it that the first store is being built on the Lekki / Epe axis of town. Is that a home for a Walmart?… Why not somewhere on the mainland? another hmmm…!
Another thought around e-commerce. What is the effect of the Walmart on the burgeoning e-commerce space. Will Walmart “do online”? Will they compete with the likes of Konga, Gloo.ng and Jumia or totally quash them? Are they big enough a threat to them as Amazon is? I guess we will wait and see.
Ok, let’s look at some of the positives. Walmart coming into Nigeria could lead to the following:
- Wakeup call to local brands and the existing foreign brands in the areas of price and standards:
- Price — Walmart is known to be the king of the price war. They negotiate hard with suppliers and pass on to consumers to drive volumes of “reasonable” quality merchandise. Their slogan, “save money, live better” sums this up nicely. I do hope this is their plan for Nigerians. I will hate to go into a Walmart and be paying Spar or Goodies type prices. Walmart, please dont!
- Standard s— Packaging and product presentation will move a notch up. They are all battling for share of wallet.
- Wake up call to suppliers: Farmers will have to get their game tight and produce more economically and efficiently and begin to be more creative with solving the numerous supply chain issues. All good but with some likely downsides — the rise of genetically modified foods (GMOs) which needs to be properly regulated.
- Wakeup call to the Nigerian banks: I’m hoping this will mean that Nigerian banks / financial institutions will now see “the potential” in this sector and develop expertise to better fund and grow the retail sector and by that, I mean moving away from those term loans and ridiculous interest rates. Knowing Nigerian banks, I’m sure there is already a scramble for the Nigerian Walmart banker(s). Shame unto you Nigerian banks if that is where it ends and you don’t begin to support and grow your own.
- Opportunity for the businesses along the value chain: I can become a tomato farmer with only one customer. One big customer — Walmart! because of their share size and volume. Also, it all translates to more shelf space, I’m sure no potential supplier (including multinationals like Unilever, P&G) is complaining.
- Opportunity for a true middle class/ middle -upper class supermarket chain and pure organic food players: The likes of Waitrose and M&S in the UK and HEB, Raleys and Sprouts in the US. It will be great to see a locally owned version of these berth in Ikoyi in Lagos or Maitama in Abuja and truly serve the middle to top segment of the market.
- Jobs: Last but not least and always at the forefront. Walmart will provide lots of low skilled jobs which will solve a lot of problems. However, can someone please make sure local labour laws are enforced!
In summary, kudos! to Walmart for following the opportunity and welcome! But we are have our eyes on you!
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