THE Nigerian operator of Spanish supermarket chain Distribuidora Internacional de Alimentacion (DIA) plans to open more than 100 stores by 2020 to take advantage of rising spending in Africa’s most populous country.
First Master Retailers Ltd. (FMR), the Nigerian company that bought the local rights to operate DIA stores, could open as many as 25 CityDia shops a year, Chief Operating Officer Samuel Abiola-Jacobs, 35, said in an interview in Lagos, Nigeria’s commercial capital, on Tuesday.
FMR opened its first CityDia store in the city on Saturday and is opening a second there in the next few days, he said.
DIA-branded shops are in emerging markets including China, Brazil and Argentina. Nigeria is the third African market to have the company’s stores after Ivory Coast and Senegal, and is the Madrid-based brand’s first foray into an English-speaking country.
“Senegal in three years has grown to over 60 spots and they haven’t even gone throughout all Senegal, so you can see the potential is massive,” Abiola-Jacobs said. “Given how populated we are here and the growth of consumerism in Nigeria, we’re expected to do even better.”
DIA isn’t as optimistic about the outlook for store openings as First Master Retailers, a spokeswoman said by phone from Madrid on Wednesday. FMR is an independent company supplied by DIA, she said.
DIA shares have gained 11% in this year, compared with a 18% fall on the Madrid Stock Exchange General Index. The company is valued at 3.8 billion euros ($4.3 billion). About a third of its revenue comes from emerging markets.
High property costs
International retailers have struggled to establish themselves in Nigeria, which has a population of about 180 million, due to high property costs and difficulties transporting products to stores.
Cape Town-based Woolworths Holdings Ltd. announced the closure of its three stores in the country two years ago, while Shoprite Holdings Ltd., South Africa’s biggest food retailer, and Amsterdam-based Spar International are among the few foreign food retailers operating in the country.
Lagos is among five African cities, including Johannesburg and Cairo, where consumer spending is expected to grow to more than $25 billion a year each by 2020, equivalent to Mumbai and New Delhi, according to a 2010 McKinsey & Co. report. About 44% of the Nigerian population are under 15 years old, compared with 28% in South Africa, US Census Bureau data shows.
More than 95% of shopping purchases in Nigeria are still made in open-air markets, creating an opportunity for retailers to thrive as consumers switch to formal stores, according to Abiola-Jacobs.
“When you go into emerging markets and lower income areas, you have a number of people, maybe six or eight, living in one household, so what you need to look at is the combined spending power, rather than the individual spending power,” he said.
“When you combine it, you find that there’s good purchasing power.”