The emergence and expansion of modern retail supermarket chains is progressively transforming grocery shopping patterns among Nigerian consumers. With changing lifestyles and increasing income levels, supermarkets are providing a new shopping experience that is fast gaining traction, especially in the country’s major cities.
Supermarkets Take Root in Nigeria
Formal supermarkets first emerged in Nigeria during the early 2000s, marking a shift away from traditional open markets and mom-and-pop stores that had long dominated food retail. South African giant Shoprite opened its first outlet in Lagos in 2005 heralding the dawn of modern food retail formats in the country. Its success spurred the entrance of other major chains like Spar, Park‘n’Shop, Ebeano, Sahad Stores, A.Y. Abdulsamad, Addide, Hubmart Stores, etc.
These supermarkets predominantly targeted middle and upper-income groups within the major cities of Lagos, Abuja, Port Harcourt, Ibadan, Kano and Kaduna. With air-conditioning, shopping trolleys, check-out counters and shelves neatly arranged with imported and local groceries, supermarkets offered a modern shopping ambience that caught on among urban dwellers.
From just 3 formal retail outlets in 2003, the number has risen exponentially to over 800 modern retail supermarkets spread across Nigeria’s cities as of 2022. Total retail space has surpassed 1 million square metres stretching across the major food retail chains.
What’s Driving Supermarket Growth?
Various interlinked socio-economic factors are catalysing the supermarket boom in Nigeria:
Rising Urban Middle Class
An upwardly mobile middle class with higher disposable incomes has emerged in major cities, willing to shop in organized retail settings offering one-stop convenience.
Nigeria’s urbanization rate of over 50% coupled with a huge youthful population concentrated in cities has created a swelling consumer base and changing lifestyles.
Women in Workforce
A greater number of working women with less time to shop daily prefer modern supermarket convenience.
Exposure to global trends via media, travel and the internet drives aspirations for modern retail.
Many local and foreign investors have pumped funds into Nigeria’s food retail on the back of attractive demographics.
Supportive Government Policies
Policies like restricting informal street markets in cities to specified areas make room for supermarkets to thrive.
Increasing Vehicle Ownership
Private car ownership has risen rapidly, enabling bulk shopping trips.
Changing Shopping Habits
Younger Nigerians spend more on grocery shopping. Bulk buying is preferred to daily purchases.
Growth of Malls
Supermarkets strategically locate themselves in flashy new-style shopping malls to attract shoppers.
Key Supermarket Retailers
The major supermarket players shaping Nigeria’s retail landscape include:
Part of the South African group Shoprite Holdings Ltd, it pioneered modern food retail as the first major chain starting in 2005. Shoprite currently has about 30 outlets across 9 states making it the largest player.
Owned by Artee Group, Spar entered Nigeria in 2009 and has grown to become a leading supermarket brand with a presence in Lagos, Abuja, Port Harcourt, Enugu and Calabar.
Park n Shop
Owned by A.Y. Abdulsamad Group, Park n Shop opened in 2005 and has over 15 outlets in Lagos, Abuja, Port Harcourt and Abeokuta.
An indigenous retail group owned by Afam Mallinson Ukatu, Ebeano operates over 20 stores in Abuja, Lagos, Port Harcourt, Enugu and Kano.
Sahad Nigeria Limited, a subsidiary of Hong Kong-based AS Watson Group has over 10 retail stores across Lagos and Abuja.
Justrite is a growing retail chain with a presence across Lagos and neighbouring Ogun State.
Addide operates a chain of supermarkets in Abuja and recently expanded into Lagos.
Payless is an Abuja-based retail chain with luxury mega stores in high-end locations.
Indigenous supermarket group Hubmart has outlets across Lagos mainland and Lekki/Victoria Island.
A supermarket chain focused on health, beauty and wellness products.
Prince Ebeano Supermarket
An Abuja-based supermarket chain rapidly expanding across northern Nigeria.
Mr Price Superstores
Operates large format stores in upper-income areas of Lagos and Abuja.
Operational mainly in Lagos, Ogun and Oyo States
Owns the Novare Lekki Mall housing Spar Superstores.
** gameplay Superstores**
A fast-growing retail chain in Lagos owned by Sims Nigeria Limited.
Supermarket Locations and Formats
Nigerian supermarket chains operate three major outlet formats:
These are individual stand-alone stores in owned or rented buildings ranging from 200 – 5,000 square metres located in residential areas.
Large stores between 5,000 – 10,000 square meters are situated in upmarket locations catering to high-end shoppers.
Strategically situated as anchor tenants within modern shopping malls. Average store sizes range between 1,000 – 5,000 square metres.
Geographically, Lagos State has the highest concentration with over 40% of formal retail outlets clustered on Lagos Island, Ikeja, Lekki, Ikoyi and Victoria Island targeting the affluent population.
Abuja as the capital city also boasts a high density of supermarkets in areas like Garki, Wuse, Maitama and Asokoro where elite residents and expatriates reside.
Other major locations are within Port Harcourt, Ibadan and the major southeast cities. Northern Nigerian cities still lag behind in retail infrastructure with Shoprite pulling out in 2019. However chains like Prince Ebeano, Addide and Sahad have expanded to tap growing demand.
Smaller neighbourhood supermarkets are also emerging in middle-class residential estates in Lagos, Abuja, Ibadan and Port Harcourt.
Product Mix and Positioning
Nigerian supermarkets typically offer a broad range of products and target specific consumer segments:
Groceries – A wide variety of local and imported food products like rice, pasta, cereals, seasoning, oils, tinned foods, snacks, fruit and vegetables, dairy products, frozen foods etc. This makes up 60-70% of shelf space and a large chunk of sales.
Non-Food Items – Household items, toiletries, cleaning agents, baby items, over-the-counter medicine, stationery, magazines and general merchandise make up 15 – 25% of product range.
Fresh foods – Bakery items, fresh meat, poultry and seafood usually account for about 10 – 15% of product mix.
Electronics – A limited range of electronics like mobile phones, TVs, computing, and home appliances target higher-income shoppers.
Most major chains position themselves as premium retailers that offer quality assurance, imported goods and a pleasurable modern shopping experience. Imported items, speciality products, and fresh sections are emphasized to differentiate from open markets.
However, lower-priced local alternatives are also stocked to retain price-sensitive shoppers. convenience is another selling point.
Township supermarket branches provide convenience for neighbourhood residents while flagship stores in upmarket locations target high-income segments.
Target Consumer Profile
The typical supermarket shopper in Nigeria is identified as:
- Aged 25 – 50
- College educated
- Middle-class professional or entrepreneur
- Household income above N150,000 monthly
- Owns a car
- Lives in an urban area
- Can afford bulk purchases
- Values convenience and product range
Students, singles and upper-class segments are also attracted by the ambience and novelty. Lower middle class and rural folk still prefer markets.
Benefits Provided to Shoppers
- One-stop shopping convenience and time savings
- Wider range of quality products
- Clean organized shopping environment
- Air conditioning and trolleys for comfort
- Safety and parking
- Branded imported and speciality items
- Price-marked items and promotions
- Self-service format and cashless payments
- Entertainment and mall attractions
Impact on Shopping Habits
Modern supermarkets have catalysed these broad shifts in grocery shopping habits and attitudes in Nigeria:
- From daily purchases to weekly/monthly bulk buying
- From crowded markets to organized retail settings
- From product touch and negotiation to pre-packaged self-service
- From limited choice to extensive variety
- From informal payments to formal checkout counters
- From home delivery to personal shopping trips
- From basic food items to speciality products, frozen foods, ready-to-eat
- From focus on price to focus on convenience, quality, safety
However traditional open markets and informal retail still dominate overall, accounting for over 80% of Nigeria’s grocery sector. But supermarkets are steadily making inroads among middle-class city dwellers.
Formal retail has achieved remarkable growth in the last decade:
- Market size estimated at over ₦1 trillion in 2022
- Average annual growth rate of 12% since 2010
- Supermarkets account for around 20% of urban food retail
- Shoprite monthly turnover rose from ₦4 billion in 2005 to over ₦14 billion presently
- Retail space increased from less than 10,000 m2 in 2003 to over 1 million m2 in 2022
- Some chains are expanding at the rate of 5 – 10 new stores annually
However, the spill-over effect on suppliers, especially local producers, has been limited as supermarkets still depend heavily on imports for packaged and non-food items.
Challenges Affecting Supermarket Growth
Despite rapid retail growth, modern chains face obstacles:
- Very high rental costs especially in desired locations
- Fluctuating disposable incomes and weak naira affect sales
- High cost and erratic power supply increases overheads
- Inadequate and costly warehousing facilities
- Complex import procedures and forex scarcity hurt supply chains
- Traffic congestion and poor road networks limit customer mobility
- Inconsistent government policies and excessive taxation
- Low consumer awareness and loyalty to traditional markets
- High cost of retail technology adoption and automation
- Scarce skills, training costs and high employee turnover
- Thin supplier base and low manufacturing capacity
- Difficulty of retail expansion into lower-income areas
- Rising competition from informal sellers and e-commerce
Future Industry Outlook
Nigeria’s rapidly rising population, youthful demographics, growing middle class and increasing urbanization provide positive fundamentals for long-term retail growth.
However, for the formal grocery retail segment to achieve its huge potential, concerted efforts will be needed to improve aspects like infrastructure, supply chains, manufacturing support, skills development, consumer education and technology adoption.
More localization, lower price points, decentralization, eCommerce integration and innovative store formats will be critical for growth beyond affluent urban segments into the wider Nigerian mass market. Modern retail is bound to grow but will co-exist alongside the informal markets.
The outlook remains optimistic for those retailers who are innovative, leverage technology, build robust supply chains and understand the nuances of the Nigerian consumer.