Lamentations as recession hits mobile phone market
There is lull in the mobile market and it is attributed majorly, to the current economic trend in the country, or simply, ‘lack of money in circulation!’.
Vendors are currently faced with the challenge of low patronage, the first in Nigeria’s 15 years of telecommunications revolution and except the economy rebounds quickly, there are indications that many mobile phone sales outlets in the country may soon close shop.
With people rather focusing more on taking care of their ‘stomach infrastructure’ than buying new mobile phones, The Guardian investigations confirmed by some major vendors in Lagos, showed mobile phone sales have, since March, dropped by as much as 80 per cent.
Though, smartphone penetration has gone as far as 30 per cent, investigations showed that rather than buy new devices, most people either choose to maintain their damaged phones, go for refurbished ones or buy the very low-end ones.
It was also gathered that online shopping for smartphones on some of the eCommerce sites has also reduced drastically because of lack of disposable income.
A Senior Manager at Revive Technologies, a leading mobile phone sales outlet in Nigeria, who preferred anonymity, said the current economic situation in the country has affected the citizens badly to the extent that people are no longer buying phones.
“I mean the traffic has gone down seriously ”he said.
According to him, the high end devices and brands are those majorly affected.
“Late last year into early 2016, you see people change phones randomly, but that is no more happening. There has been a slash of about 80 per cent in mobile phone sales in the country because the earning power of majority of Nigerians has dropped significantly.”
The Revive Manager said ‘supposed’ low end phones including Innjoo, Infinix, Gionee, among others have really impacted on competition, forcing prices down from N55, 000 about three years ago to N20, 000 and below, currently.
According to him, government must create an enabling environment for the economy to thrive, which could also stimulate establishing manufacturing plant in the country. He stressed that it may only be people who steal money that can afford the big brands in the market
Commenting on the matter, another manager at Micro Station, a device vendor said : “Only God knows what will happen by the end of the year. People hardly buy phones or electronics now. Government must fix this economy, and quickly too,” he stated.
Founder of Yudala, a leading eCommerce site in the country, Prince Nnamdi Ekeh who confirmed to The Guardian of drop in sales of mobile phones added that Yudala would rather strategise on pulling customers from competition rather than waiting for new ones to come to the market.
According to him: “People still patronize Yudala on daily basis despite market lull, but we are strategizing to be ahead of competition,” he stated.
Ekeh and the Revive Manager urged government to encourage local production of these devices stressing that the resources, both human and material, to do this, are adequately available in the country.
Ekeh also stressed the need for government to look into the forex situation which is hurting the Information and Communications Technology sector, which needs foreign exchange to bring in equipment.
Speaking to The Guardian, the Chief Executive Officer of Jumia, Juliet Anammah said “people now prioritise their wants because there is no disposable income like before
“However, even with their new priorities, we have noticed that people now go for lower brands that can serve the same purpose as the leading ones. The reasons are obvious; no disposable incomes.”
A Senior Manager at Lenovo said people are still buying mobile devices, but not the premium and high end brands.
He explained that there has been “serious growth of devices in the range of N25, 000 to N30, 000, “but the high end ones, which are from N100, 000 and above, considered as premium, now suffer low patronage.”
Relying on statistics from GFK, a leading research consultant, the Lenovo chief, disclosed that about 550,000 smartphones are sold monthly in the country, stressing that about 25 per cent of this may be sold in West Africa, adding that the largeness of Nigeria’s market makes it more attractive.
A consumer, Funbi Akintola, who spoke with The Guardian at Slot Office in Ikeja observed that “people will not buy new phones when they are hungry. By this time last year, you can hardly find space inside this outlet.People don’t have money to throw about anyhow and anymore,” she stated.
Explaining more on the distress in the sector, Paul Obanouh, a manager at one of the franchise sales outlet at the Computer Village, said the inflationary trend, especially as it affects the exchange rate of dollar, contributed significantly to the high price of mobile phones, “because we get these phones at exorbitant prices.
Last year, with $50, 000, we could ship into the country, almost half of a container, but as I am speaking to you now, it has become extremely difficult for that same amount to bring in a quarter of a container. You can see that we are in trouble.”
According to him, some vendors still try as much as possible to bring in latest brands including Apple, Samsung, HTC, LG, but “the patronage is not there again. The earning power of an average customer has dropped significantly. Hardly will you see any of the vendors break even now not to talk of making profits. It has gone that bad in the last seven months. ”
A mobile phone freak, Tunde Ajayi, who spoke to The Guardian at one of the outlets of Yudala in Ikeja, said because of poor circulation of money in the economy, people no longer buy high end phones.
“I am a Samsung freak and I make sure that every four months I change it to get the latest one, but as you can see now, I am buying a very low end one. Don’t be surprise if you see me opt for Nokia phone which cost N2, 000. The economy is bleeding and profusely for that matter.”
However, the lull in mobile sales might be global, going by information from the International Data Corporation.
According to the preliminary results from the IDC Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 343.3 million smartphones worldwide in the second quarter of 2016.
This was relatively flat, up 0.3 per cent from 2015 when vendors shipped 342.4 million units. The market did show greater sequential growth as shipments were up 3.1 per cent from 333.1 million in the first quarter of 2016.
Program Vice President with IDC’s Worldwide Quarterly Mobile Device Trackers, Ryan Reith, said, “we continue to see a number of changing dynamics in the smartphone market and many vendors are readjusting their business strategy and portfolio to take advantage of these market movements.
“Mature markets continue the transition away from pure subsidy and over to EIP programs and Apple is beginning to put more emphasis on ‘Device as a Service’ to try to prevent lengthening replacement cycles. This is a growing theme we have heard more about from personal computers to smartphones.
“Additionally, the overall China market slowdown continues to ramp up competition in other high growth markets like India, Indonesia, Middle East and Africa.
Interestingly enough, our early findings show low-end Chinese OEMs that predominantly built their business domestically in China are having success penetrating non-China markets, despite low-end competition from local brands already in place.