Chapter 3: Location Factors
Nigeria is a country that has been raising in the retail industry with strong sales growth reported during 2014 and part of 2015. This progress can be can be attributed to the increase of the young urban population which is driving some retailers to modernize their operations and to invest in the country. The desire of the population to become more technological advance and keep up with the world fashion models has contributed to the expansion and the implementation of new model of shopping, appearing new creative concepts and developers that meet the need of their customers.
During the year of 2015 there was a crisis which cause different challenges and problems throughout the year. The impact that it had on wholesale and retail industry inside this country was that the growth rates didn't evolve as it was expected, although they didn't meet the qualifications both industries beat the real GDP growth in the same year when the modernization of retailing led to a reduction in sales of tax, avoiding, smuggled and informally distributed product. The majority of the percentage of the growth was appreciated in non store retailers that remain to be a small channel of distribution inside the industry. This is due to the marketing approaches and the development of different activities in internet retailers such as Konga and Jumia. This helped and increased the access to the internet with the thriving through smartphones and tablets, meeting the government desires to adopt “cashless” shopping.
Retail in Nigeria is mostly dominated by traditional channels of distribution of products such as open market, where can be found a great variety of products and resources, from food to apparel and electronics. The market of retailing is still very fragment and is not driven to have a strong share. Nonetheless there is an increase of presence of international retailing chains such as the Supermarkt Nigeria Limited's Shoprite and Artee Indutries Ltds Spar, which are changing the whole environment of the industry adding more stores during the years of 2014 and 2015. In other hand convenience stores have begun to perform better the the larger outlets in urban areas because they are targeting more the thriving urban market analyzing their needs and costumes to comprehend their behavior and what drives them to purchase an item.
The sociologist Edward Hall identify two theoretical dimensions of culture making a distinction between cultures where the meaning of an individual's behavior depended on the context of the situation and on the words. In the first one high context the cultural nonverbal messages have important meaning and for that it is necessary a similarity of backroung, while in low context the intentions and feeling are expressed through words and the situation does not change them.
Nigeria is a country than can be classified as a high context society because they relay more on the understanding of the meaning more than in the explicit messages. Their people believe in politeness and cheerfulness when they exchange words each one another. Instead of thinking just in “ I ” they think as a “ WE” just like a community. The timing in a conversation is very important because it is considered a way to show manners. The Nigerians believe in close contact that is why they sit together closely to express their feeling. Although there is non verbal and verbal communications in the country, the non verbal ones seem more common because the people mostly keeps for themselves informed about those that are around them.
How The Culture Relates To: Space, Material Possessions, Friendship and Time
As it was mentioned before the Nigerians when it comes about personal space they are very close to each other. An example can be when they meet on the street, they have the habit to come very close to greet each other, which means that they are paying more attention to the context of the communication including the whole situation that is around them and their friendship more than anything else.
When it comes about material possession of the Nigerian culture they are very respectful and at the same time they are very generous and don't have any problem to share their belongings with each other. The higher class of the country are very fashion conscious people that travel around the world which makes the people conspicuous consumption, meaning that they buy high end brand to show their social status.
Nigerians as it was mentioned before are very close and united. They prefer first to create personal relationships prior to doing business. Their different beliefs and costumes makes them even more close. One of their customs is that if a guess comes to their house uninvited he is always welcomed if not it can be seen as disrespectful.
In Nigeria time plays a very important role in every individual lives but also does flexibility. The way they work is very relaxed and easy going. If someone has a meeting at 10 it could be happening at 3 and people are very aware of this factor. Although they think that the time given should be very productive.
Hofstede's Cultural Dimensions Model
A researcher Geert Hofstede made a study about the impact that it had national culture on individual behavior. He divided culture into four dimension that their main focus is to classify society and how they embrace traditional values.
The first dimension is the power distance, that refers to the level of equality and inequality that a society has. If we adopted this to Nigeria we can say that there is a large power distance in the country because of the huge inequality that the country in facing. There is huge gap between the poor and the wealthy people which makes very clear the distinction of a superior group. The people that are at the highest level are mostly involved with the government, official of chief. There are different confrontation that are the result of the lack of an equality system. The country faces a huge wave of corruption and that tends to be a lack of upward mobility, there are also different struggles between the government and ethic based tribes who dispute their territory because both parties want to control the territory. Also at the same time there are confrontations between the Muslims and Christians who defend their own beliefs in the country.
The second dimension is the uncertainty avoidance, which focuses on the willing of a society to take risk. All Muslim countries tend to have high uncertainty avoidance, because they don't take risks. Since in Nigeria most part of the population is Muslim it can be considered part of the high uncertainty avoidance. This country has been changing from one way of government to another, and this happens because they are not completely sure what would happen in the next government. That is one of the reason why the government has to implement low tolerance for uncertainty and ambiguity, which creates more rules and regulations to ensure the order of things inside the society.
The third dimension the the individualism vs collectivism, which focuses in the I vs the We. As it was mentioned before Nigerian people focus more on the we and the community than on themselves, that is why we can say that they are a collective society where the individualism is highly discouraged. People are though since they are kinds to interact with each other collectively, which has reinforced the close ties that exist between families and friend. One thing that can proof that they are a collective community is that the complete family lives together and share everything like compounds. Another important fact that can be an example of the dimension is that when Europeans colonize Africa there where different ethnicities living apart, but in harmony with each other but because there was the need of independence all of them decided to unify their power to fight for the liberation of the country, which shows strong communal work and bond.
The fourth and final dimension is the masculinity vs femininity, which looks at how the roles inside a society are arranged. In many African countries the roles of the women and men are clearly defined, just a few women are able to be involved in political and professional careers. Single women in many countries as in Nigeria can be married as an arrange of different families in order to beneficiate one part or another, they are seen as sexually available and that has a huge value. It depends on the are that they live but in the rural areas it is expected that the women bring money to support her family income. Men don't have the obligation to sustain a household, this can be seen in the delegation of task, like in agriculture where men cultivate yams and women cultivate beans and cassava.
Chapter 5: Retailing in Developing Countries.
Nigeria is at third stage of development in the Rostow's moded. This stage is called “The Take Off”, and it happens when a country has achieved a growth pattern that has become a normal condition and people inside the country are ready to have and experience a steady development. In the book International Retailing mentions that the country is at the second stage which is the preconditions for take off, but after evaluating all the development of technologies and the improvement of the market we can say that this country has a very upcoming economy where brands are entering to the market and supermarkets are emerging leaving the old family operations to become bigger stores.
To conclude this analysis, we can say that although the country faces some instability and problems, it is important to acknowledge the fact that their economy is growing and the people in the society are fashion conscious, which means that they know what is being offer to the world and this factor could represent a very good opportunity for brands to invest in the population of Nigeria. Maybe there are regions that supper from poverty, but that could also be an opportunity to create social conscious business like the brand TOMS that gives a pair of shoes to kids in different parts of the world that can not afford to have one when someone buys a pair.
For retail stores like Gap and Banana Republic if they have the opportunity to come to a country like Nigeria, can be a good investment but not right now, although there is thriving of the urban society that is looking forward for fashion statement pieces that can turn beneficial for their brand, it is important to know that this economy is just rising, so I would recommend to evaluate the different possibilities and options the pros and cons before make any decisions.
These retailers can take into consideration the fact that people from Nigeria takes the time to create strong relationships, which can be used as an advantage to built a strong target market who can be in the future potential buyers. In this way they can begin developing some planning to bring their brand to Nigeria but taking the right time to evaluate the fluctuation of the economic environment.
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