‘Manufacturers endangered as more Nigerians switch to cheaper brands’
Manufacturers have been put in a tight spot as six out of 10 Nigerians have switched brands over the last year due to volatile interest rates, rising inflation, cost of goods, unemployment, and economic recession, which are currently ravaging the economy.
This was disclosed by the Associate Director, Retail Intelligence, NielsenIQ Nigeria, West Africa, Joyce Nwachukwu, in a research carried out by NIQ, a retail and consumer insight company.
Nwachukwu said that 63 per cent of Nigerian consumers feel they are in worse financial conditions ever compared to 38 per cent of global consumers, making them cautious of their spending as across all continents, where double-digit price increase has been recorded.
She said that though sub-Saharan Africa (SSA) has been experiencing slower growth from the rebound of the 2021 effects of COVID-19 pandemic, there are, however, still opportunities available, fueled by its population growth, which would lead to urbanisation and industrialisation.
To the Managing Director, NIQ East and West Africa, Faith Wanderi, with the high inflation, poverty, unemployment, rise in fuel prices and forex crisis, it is important for companies to know areas to focus their energy. She said in order to drive success in the current situation; organisations need to focus on good innovation and activation.
Indeed, earlier in May, Manufacturers Association of Nigeria (MAN), in its Bi-Yearly Economic Review report, showed that the sector’s contribution to the Gross Domestic Product (GDP) in the first quarter of 2023 was 10.13 per cent, lower than the 10.20 per cent recorded in the corresponding period of last year as a result of the numerous challenges experienced.
The MAN report showed that real GDP growth in the manufacturing sector in the first quarter of 2023 was 1.61 per cent (year-on-year), lower than the same quarter of 2022 and lower than the preceding quarter by 4.28 percentage points and 1.22 percentage points respectively. The growth rate of the sector on a quarter-on-quarter basis stood at 1.63 per cent.
Further on the solution, NIQ urged manufacturers to engage proper data analysis before embarking on price increase. Wanderi noted that the firm delivers the most complete and clear understanding of consumer buying behaviour through an advanced business intelligence platform with integrated predictive analytics.
Senior Research Manager, NIQ, Tosin Onayemi, based on a research carried out by the firm 63 per cent of Nigerian consumers said they only have money for food, shelter and basics, while 78 per cent of Nigerian consumers feel the economy is in a recession because of the high cost of living.
As a result, in prioritising their expenditure, Onayemi noted that 86 per cent of Nigerians want to focus on future planning, 81 per cent on health and wellness, 79 per cent on saving for unforeseen circumstances and 77 per cent on mental wellness.
He noted that Nigerians are concerned about food and grocery prices, followed by fuel and transport costs, economic downturn and are looking to spend less on clothing, snacks, out of home dining and others. He added that almost six in every 10 shoppers have switched brands in the past one year due to increase in prices resulting from tighter wallets.
Executive Consultant, Drugs and Medicament Nigeria Limited, Chidi Okoro, said the government has to allow traditional and modern trade systems to thrive. He stated that traditional trade remains key in the market, contributing to 98 per cent of the market, adding that both modern and traditional trade markets see growth in value but decline in volumes in Fast-Moving Consumer Goods (FMCG).
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.