Why Nigerian retailers should care about millennials
Damilola Oyebayo
Damilola is committed to helping individuals achieve their dreams and corporations grow their businesses.
Every century has its own idiosyncrasies and it can be argued that digital technology has been the most distinguishing feature of the 21st century, globally, we have seen both public and private sectors leveraging digital technology, from drone technology to e-commerce, powerful nations that have taken advantage of digital technology have become more powerful, similarly, some of the world’s richest individuals have acquired a chunk of their wealth by utilizing digital technology.
The most prominent generation in this century has been the Generation X, also referred to as ‘Millennials’. Although, there is no consensus on the exact range of the years of birth, “millennials” are children given birth to between 1980s to around 2000. US Census Bureau (2013) says they represent one-third (25%) of the entire US population and it is the biggest generation in the US. The introduction of technology in schools (in the US) in the 1970s shaped their growth and worldviews. According to Goldman Sachs, they are; “the first digital natives, social and connected and they have different priorities”.
Millennials have forced many industries globally to alter their business and operating models, for instance, in the US, retailers have adjusted their service offerings to attract the millennials largely because of their population and online presence. There are about 80 million millennials in the US alone and each year, millennial shoppers in the US spend about $600 billion. An Accenture research (2015) projected that the spending by millennials will grow by $1.4 trillion annually and will represent 30% of total retail sales.
In the US, Millennials value brands that enhance their lives, “useful” has become the new “cool”, they appreciate retailers that are ‘seamless’, i.e. meeting their unique needs without any physical and temporal constraints. Some retailers in the US have altered their business models in the following ways;
- IT oriented services: Millennials have large online presence, retailers now use online platforms to reach their customers, and almost every retailer (including Wal-Mart, Target, etc.) now advertises products online; through websites, the social media and mobile apps. Also, retailers now maintain consistent brand outlook, whether online (on smartphones or PC) or at the physical stores.
- Quality of Services: Retailers have improved the quality of their service offerings and value propositions (i.e. the product, customer care, pricing and delivery), millennials now have many choices, to satisfy their needs retailers have to keep improving their value propositions. Some have partnered with third-party logistics providers that deliver goods purchased online to customers on the same day, or with an online payment portal (e.g. PayPal) while some (e.g. H & M, Jimmy Choo) now have products that are specifically made affordable to the millennials.
In the Nigerian context, we are forced to ask whether the same opportunities abound for the retail industry, to put it in proper perspective, it is germane to examine the growth drivers and challenges in the Nigerian retail sector and whether there is need for players in the industry to leverage digital technology to capture millennials.
To begin with, according to the Nigerian National Bureau of Statistics (NBS), the population of the country is about 170 million, just recently NBS released the Nigerian Telecommunication Report of Q1 2016 which indicates that the number of active internet subscriptions in the country stood at 92.4 million. In essence, 54% of the Nigerian population had access to the internet in Q1 2016!
Sadly, according to the 2015 African Retail Development Index (ARDI) released by A.T Kearney, Nigeria’s retail industry ranked 4th in Africa which indicates a decline from 2nd position in 2014; true-spending by the true-middle class was truncated as a result of their low population (which is lower than the countries that ranked higher). Also, doing business in the country is difficult (the 2015 Doing Business Report ranked Nigeria 169th out of 189 countries that were studied), lastly, in addition to Nigerian consumers being price- and- brand sensitive, they also care deeply about where a product originates, which has hindered the growth of some domestic retailers over the years.
Despite these challenges, one cannot ignore; internet inclusion, digital technology and the population of millennials as likely growth drivers of the industry. In an article by Venturesafrica, millennials were reported (in 2015) to account for 60% of the Nigerian population, and a research conducted by Pew Research Centre (2015) indicates that millennials account for 52% of internet users in Nigeria.
On one hand, A.T Kearney reported that modern supermarkets in the country make up only 1% of all trade as the retail industry is still dominated by informal shops and convenient stores, on the other hand, many online retailers (like Jumia, Konga, OLX, etc) established in the past few years designed their business and operating models on digital technology (websites and mobile apps) to capture a larger market share. Their presence online has reduced the impact factors like location and time have on service delivery, now, we can shop whenever and wherever!
These are new realities many physical (offline) retailers have to deal with, interestingly, even the modern supermarkets or big retailers have improved their online presence, some have websites and mobile apps where people can find stores, check their products and shop online e.g. Shoprite, Foodco, MrPrice, etc. They have identified the need to attract millennials through new value propositions (especially e-commerce) to gain market share.
Certainly, making use of digital technology is just one of many steps towards the “ultimate customer conversion” which is the purchase of the product / item, however, it guarantees that a retailer can easily reach millennials which invariably gives wider outreach in comparison to not having a digital presence at all.
Hence, any Nigerian retailer that desires to upgrade from being an informal shop or a convenient store needs to utilize all opportunities afforded by digital technology in order to capture the millennial population.
Could you identify other digital technology opportunities that retailers can leverage to attract millennials? Please share your thoughts in the comments section below or on LinkendIn (Damilola Oyebayo) and Twitter (@oyebayod), as I learn just as much from you as you do from me.
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