Big Retail Fits Nigeria Just Right

South Africa-based clothing retailer Pepkor is planning to roll out stores across Nigeria, investing about $14 million into the venture, and becoming the first to fill a huge hole in the Nigerian market.

Pepkor targets low-income shoppers and the company is confident that the success of its stores will take off in Nigeria. Statistics show most of Nigeria’s population lives on roughly $2 a day.

“Africa is awakening,” Pepkor Chairman Christo Wiese told Bloomberg News. “It’s a huge market of almost a billion people with huge resources and a young population. People spend when they’re young.”

The expansion into Nigeria was made possible by the Nigerian government’s decision to lift a ban on imported textiles in an effort to attract foreign retailers. The retailer will be the first large outlet to sell clothing in the country, filling a noticeable gap in the market as now most retailers at shopping malls across the country sell only consumable products and electronics.

In Nigeria, however, Pepkor and others that follow will be establishing themselves in uncharted territory. Should Nigerian businesses and workers have reason to worry that big box retailers are coming to take a lion’s share of the market?

When Wal-Mart landed in South Africa, preparing to take over homegrown retail giant Massmart, it had the South African government to contend with. The merger was only approved on the condition that no job cuts took place for two years and that employment preference would be given to Massmart employees who lost their jobs last year, among other conditions.

Although it remains to be seen whether the Nigerian government is ready for the impending influx of foreign retailers, Steven Hayes, president of the Corporate Council on Africa, thinks that many worries surrounding the move are not yet founded.

“It’s premature to worry about it right now. The need for access to affordable products by the poor is so great, I think this is important,” Hayes told BET.com. “The need in Nigeria is so great and the market is so underserved that I think there’s still a lot of room for small businesses.”

(Photo: Akintunde Akinleye /Landov)