Pick n Pay came to Nigeria, and in 2021, I wrote below in a piece titled “What Is Pick n Pay Playbook in Nigeria?”. From their press release, it was not the Nigeria that I know that they were describing. Today, PnP is gone: “In a strategic move that underscores the dynamic nature of international retail, South African grocery chain Pick n Pay has announced its departure from the Nigerian market.”
From 2021: ‘Shoprite came to Nigeria in Dec 2005 when Naira was about N127 to a dollar; the South African Rand was about 7 rand to a dollar then. Last year when it began the exit process from Nigeria, one dollar exchanged for N380… Nonetheless, the biggest problem was not the currency deterioration in Nigeria but the fact that the middle class was shrinking, affecting the capacity of Shoprite to capture value with the presence of supermarkets, open markets and even street-sellers as competitors.
‘When that exit was announced, I wrote, “Shoprite may not be doing terribly bad in Naira but struggles in Rand when it reports in South Africa. It is exiting Nigeria even though it makes tons of naira.”
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‘But in the midst of this paralysis, another South African retailer is here: Pick ‘n Pay. My question is this: what is the playbook for success in Nigeria considering that Shoprite, Mr Price and Woolworths could not overcome the paltry effective 30 million addressable market in Nigeria? Yes, I model that Nigeria has only 30 million who earn “decent” income and those 30 million support the remaining 180 million citizens.’
Today’s comment: The product-market fit is not there to run this type of business in Nigeria. Unlike South Africa, Nigeria’s most significant opportunity for B2C operations lies with consumers who earn around $4 – $8 per day, but that spectrum is not a very sweet domain for organized retail. You need at least $15 per day to make it fascinating for the likes of Shoprite and Pnp. So, there is a clear product-market fit dislocation and that has made organized retail challenging in Nigeria.
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