What is the potential for retail development in Nigeria?

The potential for retail development in Nigeria amidst a challenging economic landscape was the focal point of a recent CNBC Africa interview with Jan Van Zyl, Country Head for Novare Equity Partners. Nigeria, the most populous country in West Africa, has seen a 17 percent decline in Foreign Direct Investment in the first half of the year, according to the United Nations Conference on Trade and Development. Despite this, Van Zyl remains optimistic about the future of retail in Nigeria. Van Zyl emphasized that the key to success in the retail industry is to invest in the long term and not be deterred by short-term economic challenges. Novare Equity Partners has opened three shopping centers in Nigeria in the last two years, a clear indication of their confidence in the country's retail potential. Van Zyl highlighted the importance of developing shopping centers and formalizing retail in Nigeria, citing the lag time of years, or even decades, it takes to build such infrastructure. He warned that giving up due to short-term economic hardships would only benefit the competition. Van Zyl also discussed the need for new investments in the retail sector, pointing out that developments like the aquatic site project require years to materialize. He argued that current economic conditions do not necessarily reflect future prospects and urged businesses to plan ahead for when the economy improves. Cost management and adapting to the challenges faced by potential customers were also key topics in the interview. Van Zyl stressed the importance of finding a balance between profitability and affordability for tenants, as forcing unsustainable lease agreements could drive tenants away. He likened the approach to 'eating an elephant one small bite at a time,' advocating for a hands-on negotiation process with each tenant. In terms of technology and e-commerce, Van Zyl highlighted the coexistence of traditional retail experiences with online shopping. He underscored the importance of providing a unique in-person shopping experience that caters to customers' need for entertainment and social engagement. Novare Equity Partners has invested in amenities like Funwalt, a kids entertainment area, cinemas, and a food court to enhance customer experience in their shopping centers. Van Zyl acknowledged the ongoing integration of technology into their business but emphasized the need for gradual implementation and local adaptation. He warned against simply importing foreign models without sufficient support or expertise, citing the example of offering free internet services in shopping centers. The key, according to Van Zyl, is to do it well or not at all. Despite the current economic challenges facing Nigeria, Van Zyl's outlook on the retail development potential in the country remains positive, emphasizing the importance of long-term investment and adaptation to changing consumer needs and technological advancements.