Unknowing to many people and analysts in the economy, Nigeria’s clothing retail chains are one of the most resilient businesses in Nigeria.
During the economic boom boosted by a steady oil price many clothing retail chains floated operations alongside shopping malls that major cities in Nigeria.
However, since Nigeria’s economic challenges started, many companies have either closed shop or scale down their operations. But many clothing stores are still standing. It is no doubt that many of them closed some outlets and restructured, but their resilient spirit is seeing them through.
The likes of MRP, Max, Ruff ‘n’ Tumble, PEP, REDTag and a host of others are adjusting to the new normal. One of the major challenge that confront them is the Forex drought. Majority of them source their wares from foreign countries and depend solely on Forex availability to get a continuous flow of inventory. Second is a weakening demand from customers who have been hit hard by the recession.
About a year ago, Woolworth, a major clothing chain announced that it was leaving Nigeria for good. Woolworth cited infrastructure challenges and unmanageable costs. While this is very tenable, some of the challenges that confronted the company and other clothing stores that might have folded up are systemic and self-inflicted.
First is the wrong diagnosis of the Nigerian retail and fashion business. Woolworth came into Nigeria with a wrong business model. The company’s pricing was not in tandem with Nigeria’s middle class structure. When sampled across board, the retail stores that have been able to weather the storm have been able to fit their pricing to their target market.
Should Woolworth had aimed for Nigeria’s middle class? Yes! Was the execution of its business right? No!
Another challenge was the temptation to scale too fast. Many shopping malls have been built in different parts of Nigeria but not many of them are spot-on for certain business. MRP had to get out of some locations to streamline its business in markets where sales prospects are overtly-linked to boom and burst period like what we have now.
The next coming years might see a change in the way clothing retail stores do their business. To further reduce their exposure to Forex risks, many would probably work with local manufacturers to source their wears.