Doing business in the fashion industry in nigeria

DOING BUSINESS IN NIGERIAMAFED 2013 CLASS PRESENTATION BY OROMA COOKEY-GAM

Thursday, September 5, 2013

NIGERIA: COUNTRY OVERVIEW

Nigeria is a federal republic with 36 states. It is situated in West AfricaThe country capital is Abuja but Lagos is the commercial hubNigeria has a population of 174 million people (making it the largest country in Africa) and accounts for 47% of the population of West-AfricaNigeria’s population is made up of about 200 ethnic groups, 500 indigenous languages, and two major religions ― Islam and ChristianityThe national language in Nigeria is EnglishNigeria is the biggest oil exporter in Africa, with the largest natural gas reserves in the continent Nigeria is the richest country in Sub-Saharan africa and has the second most developed fashion industry in the region.The Nigerian economy has grown by 6% for the last 7 years mainly as a result of its booming oil sector Nigeria is also very important for its entertainment industry- music and film (nollywood)


FOREIGN DIRECT INVESTMENT IN NIGERIA

Entry strategy is usually by Foreign Direct Investment FDI in the fashion industry in Nigeria is vertical- distribution onlyMethod is usually by incorporating a wholly owned subsidiary company or could also be by joint ventures with a Nigerian company.Nigeria receives the largest amount of Foreign Direct Investment in Africa (approx $7bn in 2013) mainly due to its booming oil sectorIn 2009 Nigeria’s FDI reached $11bn making Nigeria the 19th highest recipient of FDI in the worldThe main sources of Foreign Direct Investment in Nigeria are the home countries of oil majors such as Exxon Mobil, Chevron Texaco and Shell.Sectors with major FDI inflows over the years have been the oil and gas, manufacturing, infrastructure development, services and consumer goods sectorsIn Nigeria, 100% foreign ownership is allowed in all industries except in the oil and gas industry.However for convenience and ease of doing business international investors in most industries choose to have a local partner. (e.g Zegna, Hugo Boss in fashion


NIGERIAN FASHION INDUSTY: THE CUSTOMER PROFILE (DEMAND)

DEMOGRAPHICSHuge PopulationCustomer concentration in 2 or 3 main citiesCustomers are both male and femaleNo age limitations- Baby boomers**, Generation X* and YRise of the emerging middle class who earn decent salaries and have decent disposal incomes. Service sector boom resulting in an emerging middle class with increased spending powerSpending power of the upper class extremely high mainly due to wealth from oil and gas and politics

BEHAVIORAL PATTERNS AND BENEFITS Very fashion conscious peopleMaterialistic- product/brand focused as opposed to service- buy into brands for a sense of belonging and for social status Exposure and increased awareness of fashion due to advancements in technology and entertainment Increased interest in fashion as a result of local brands kicking off the industryWell travelled and aware of international brandsCulture plays a significant role in the buying habits of Nigerians- ‘Event-attending‘ society


NIGERIAN FASHION INDUSTRY: !KEY COMPETITORS

https://www.youtube.com/watch?v=rlwFiJiZ_tM

Price/Quality/Service/Image

Indigenous Designer Brands

Cut and Sew

Tailor-made fashion

Luxury Brands/

Ready-to-Wear/ DesignerDiffusion/Upper Bridge

Bridge

Mass Brands

INTERNATIONAL MARKET NIGERIAN MARKET


https://www.youtube.com/watch?v=rlwFiJiZ_tM







NIGERIAN FASHION INDUSTRY:PRODUCTION AND DISTRIBUTION

PRODUCTION

Little opportunities for sourcing at this momentAlmost no garment manufacturing capacitiesHistorically a cotton producerNigeria’s cotton, textile and garment (CTG) industry has been experiencing a downward trend over the last three decades CTG industry was a key player in the national economy in the 80s- employed 20% of population (600,000 workers) with 170 textile mills.Was ranked 2nd largest textile hub in sub-saharan africaCTG industry suffering as a result of poor infrastructure (energy), lack of technical manpower, smuggling of cheaper/lower quality textiles, high and uncompetitive cost of productionIndustry currently under reforms- $2bn investment in industry in 2012

DISTRIBUTION

CUSTOMER SHOPPING PATTERNSGradual shift from tailor-made fashionGrowing retail culture in main citiesPurchase is usually event-driven and not casual Preference is towards multi-brand shops or mallsTendency to buy international brands abroad during yearly vacations

DISTRIBUTION OUTLETSNo defined retail districts like in most developed nations Shopping malls becoming increasingly popular Retail outlets located arbitrarily- Zegna located on Commercial street, etcUnderdeveloped in terms of actual retail experienceInternational brands mainly available through multi-brand stores at extremely high prices.Boost in E-commerce


NIGERIAN FASHION INDUSTRY: TECHNOLOGICAL ADVANCEMENTS

E-COMMERCE

E- Commerce 2 years ago, non existent but has suddenly seen a recent boom- Jumia, Konga- Mass brandsInternational companies now delivering to Nigeria- www.asos.com

INTERNET

Internet users increasing at extremely fast pace in the last 3 years as a result of smartphone and mobile data services.Fashion bloggers and Fashion websites becoming increasingly relevant in influencing opinions Indigenous brands using websites and blogs as a cheaper and more accessible method of reaching customers and providing information and customers becoming increasingly dependent on these websites.

website: http://www.hautefashionafrica.com/ http://styljunki.com/ blog: http://www.onenigerianboy.com/

SOCIAL MEDIASocial Media mainly used to promote brands as in developed countries. Instagram, Facebook and TwitterExtremely effective means of marketing as smart phones are now commonplace


http://www.asos.com

http://www.asos.com

http://www.hautefashionafrica.com/

http://www.hautefashionafrica.com/

http://styljunki.com/

http://styljunki.com/

http://www.onenigerianboy.com/

http://www.onenigerianboy.com/

ATTRACTIVENESS OF THE INDUSTRY PROS

Attractive Investment Laws- NIPC Act- Incorporation, business permits, quota positions, tax and other incentives. Large Market High population of baby boomers Growing local fashion industry- fashion weeks, international press, etc Good returns on investment Lenient tax laws Lenient processes and regulations Low cost of labour and availability of skilled labour Timing- Early and therefore opportunity to gain brand loyalty and market share

CONSLack of infrastructure- electricity, bad roads, etc Risk of political instabilityUndeveloped retail structureExpensive properties in undefined retail districtsDifferent culture- time perception, etcRelatively high standard of living

KEY SUCCESS FACTORS

A suitable and competent local partner Skilled sales force Good Location An strong understanding of the market and culture High brand perception and awareness in the eyes of the Nigerian Market


THANK YOU...GRAZIE...MERCI...IMELA...

NA GODE...ESE...


TAIWO ABDULLAHI, DOING BUSINESS IN NIGERIA

HTTP://WWW.WORLDBANK.ORG/EN/COUNTRY/NIGERIA/OVERVIEW

HTTP://WWW.CORPORATE-NIGERIA.COM/ASSETS/PDF/2010/CN-2010-FDI.PDF

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTHTTP://UNCTAD.ORG/EN/PAGES/DIAE/WORLD%20INVESTMENT%20REPORT/ANNEX-TABLES.ASPX

HTTP://LEADERSHIP.NG/NGA/ARTICLES/47914/2013/02/17/REVIVING_NIGERIAS_AILING_TEXTILE_INDUSTRY.HTML

HTTP://WWW.BUSINESSOFFASHION.COM/2013/06/MARKET-GPS-NIGERIA-TAKING-AFRICAS-GIANT-SERIOUSLY.HTML

SOURCES


http://www.worldbank.org/en/country/nigeria/overview

http://www.worldbank.org/en/country/nigeria/overview

http://www.corporate-nigeria.com/assets/pdf/2010/cn-2010-fdi.pdf

http://www.corporate-nigeria.com/assets/pdf/2010/cn-2010-fdi.pdf

http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx




http://leadership.ng/nga/articles/47914/2013/02/17/reviving_nigerias_ailing_textile_industry.html




http://www.businessoffashion.com/2013/06/market-gps-nigeria-taking-africas-giant-seriously.html




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Doing business in the fashion industry in nigeria