The second largest supermarket chain in South Africa, Pick n Pay, is following in the footsteps of Shoprite. It is set to open shop in Nigeria.
Where it seems another South African company, Woolworth floundered and closed shop, Pick n Pay thinks it can make it in Nigeria. After all, Shoprite and Massmart have unravelled the mystery of doing business in Nigeria and are doing well.
According to the company in its financial report for 2016,
A key part of the Group’s strategy is to establish a second engine of growth in markets in the rest of Africa. The Group has examined the opportunity in Nigeria in detail, given the opportunity for long-term growth in that market.
Following extensive on-the-ground market and consumer research over the past two years, the Group will partner with Nigeria Stock Exchange-listed AG Leventis to enter the Nigerian market. AG Leventis has nearly 90 years’ trading experience in the country, with substantial expertise in the FMCG, motor vehicle, supply chain logistics and real estate sectors, and notable FMCG capabilities through Leventis Foods.
Pick n Pay will hold 51% of the operation which will roll out a combination of large and smaller formats to meet consumer needs in Nigeria, offering ranges tailored to local customer needs.
The Group’s African expansion, including its entrance into Nigeria, will continue in a deliberate, planned, and unhurried way, without putting the business under undue risk
Also speaking at the release of the company’s year-end results, CE Richard Brasher said:
“The opportunity presented by Nigeria is well-known: a population of 180m, an economy worth US$500 billion, and GDP growth of around 5% a year. Some analysts forecast that by 2030 Nigeria could have 160m households with sufficient incomes for discretionary spending, and a consumer goods market worth more than US$1 trillion.
“The development of modern shopping malls since 2005 in a few major cities reflects rising incomes and changing lifestyle options enjoyed by middle class Nigerians. Existing formal players in this market have relatively little scale.
“Nigeria is a country and a market which Pick n Pay cannot ignore in its quest for long-term sustainable growth. The challenge of course is how to succeed in Nigeria. We can all point to examples which have not worked.
“I set three pre-conditions for success in the Nigerian market:
- first, we need to understand local consumer needs and how these are evolving in the country. We have done an enormous amount of research on-the-ground over the past two years to get this right.
- secondly, given the complexities of the Nigerian market, we believe a joint venture with an experienced local partner is the right approach. I am delighted with our decision to enter Nigeria with AG Leventis, which has nearly 90 years’ trading experience in the country. AG Leventis has huge expertise in supply chain logistics from their activities in the FMCG, motor vehicle, logistics and real estate sectors, and notable FMCG capabilities through Leventis Foods.
- thirdly, as elsewhere in Africa, our growth must take place in a deliberate, planned, and unhurried way, without putting the business under undue risk.
“Leventis is a family business with a similar operating ethos to that of Pick n Pay and I am confident that we have the right decision, the right partner and the right plan.”
The AG Leventis Group Executive Vice Chairman and CEO Michael Economakis has this to say on the partnership:
“Pick n Pay as an African brand is among the largest supermarket chain stores in South Africa. Pick n Pay is known for their brand values, quality and excellent service. We are delighted about this partnership with a highly recognized and trusted brand whose values, operational ethics and dynamism fully align with those of AG Leventis Group. The consumer market in Nigeria is growing with a preference towards quality and affordable goods. Our partnership with Pick n Pay will deliver unparalleled service delivery in Nigeria. Furthermore, this partnership is set to create jobs and youth empowerment.”
