Will A Large Supermarket Thrive In Nigeria?

@tinard, i sent u a mail, i think your idea is great and you need to go for it. i said i would not give out my plans but i changed my mind.

my advice is  start small, u are an entrepreneur and the likes of shopritte are large/global organisation, competing with them is a waste of useful energy

have a target clientelle- You spoke about  probably starting out in Ikorodu, this means that you are targetting the common man. This is a brilliant idea

choose a simple, easy to recall english name eg tesco store is easier to recall than aduramigba and sons stores

As a british resident, i believe u know a few things anout retailing, u mayalso  take a quick course in retail mgt.

centralised or decentralised structure? i would choose decentralised small stores located in densely populated areas in lagos.

What will u be selling- Tesco, Walmart and Sainsbury all started with food items, an average lagosian does not buy Plasma TV every year, but they feed everyday.

First few years may not yield any profit- be prepared for it

enemies of progress- Unions, police, thieves, thugs, friends will be out to ruin you- prepare

More later, cheers

@chimaze, i totally disagree with you, the only reason why Tinard should withdraw from this project is if he thinks he is not capable of doing it. And if he does not do it, i will one day return to Nigeria to do it. This is more of a passion to me than a profit oriented project.

@tinard, it would be a pleasure to return to compete with you in the nigerian retail sector.

@chimaze

I am with you on that. I am very certain this business model would not thrive in a Nigerian atmosphere.

Some questions the investor needs to ask himself or herself is :-

1. Do the hypermarkets overseas finance their investment from one source?
2. Does their model put emphasis on volume sales to justify their profitable margins?
3. Would Nigerians hang around the hypermarket just for window shopping, which is one of the revenue generating mechanism's of this model, putting reliance on impulse buying etc.
4. Can the investor compete with the current market, considering the investor's initial capital outlay and the pressure that arises.

Facts.

1. All hypermarkets overseas sell products at stock bottom prices.
2. People hang out in hypermarkets not only to shop but also to hangout in the eateries that are normally around them.
4. Their business model relies primarily on volume sales.
5. 100's of millions are invested into marketing etc  and many have failed even with such capital backings.

I have read case studies of Carrefore, Tesco, Walmart, to name a few, and I have being on the premises too, and I do know what I am talking about.

@kazey, u are not entirely right, Jack Cohen did not have millions when he started Tesco, neither did Ingvar Kamprad when he started IKEA. If i have N10 million today, you'll be suprised how my store would quickly become a household name within a few years.
its a simple business idea, buy in bulk, sell in retail. if i sell MILO/ Bournvita for N5 lesser than its normal price at Yaba market in a trendy shopping mall, people will come to me instead of the market.
Nigerians like class and good taste and i bet they will flock into a supermarket that retails at a slightly lesser price. If you remember Kingsway in Lagos in the 80's, people do go there to window-shop and end up buying, at least i remember my mum used to take us there to choose our christmas gift and she would go buy it when she is ready. From Seun's comment, teens do go to window-shop at GAME hoping that they would be able to afford the stock soon, Land of Plenty (LOP)  and Adidas shop in VI was like that when i was in secondary school in Lagos.
i agree with the idea of an eatery, very brilliant i must add.

tinard,to invest in nigeria u must look deep before u leap because it has happened to me.i sold my night club down here in buenos aires to move home with my family,it turned out to be my worst experience in life and i ended up losing over  $300,000 (dollars).frustration from all angles,everybody around was trying to eat from my pocket.the lands i bought to build a hotel turns out to be a money losing machine after the payment for the property,i learnt i have to pay family money,omololile,boys money,taking to so many elders to pay tribute with whisky and enveloped money, just too many unespected expenses. i lost soo much that i had to run back here with my family. all in all when it comes to business in nigeria the rules are not clear.

if u must invest in niigeria,i will advice u go down there first like nobody, (many people will not come around when the think u come back with nothing)that will give u the opportunity to be focused and find out exactly what to invest in.you might like to find out why kingsway,chanry,utc and many others failed.it will be a big help.

First, I Thank all that ve said something here, I thank you guys not that i have any personal gain Neither from your answers or what the guy is trying to do But because, It  feels good to read about Nigerians on a different issue other than crime, Those of you who lives outside the country knows exactly what i mean, Secondly, It's good to know that some of our men and women with some cash or access to cash is thinking about heading home for investment,
Well, To your question, I think the biz. will thrive as long as the feasibility studies where done well, Just like one of the guys who spoke earlier said, The main area you would have to do a very serious job is on the Water, Energy and Security,
The security issues are in 2 diff. ways, One, the gun guys, Which i think you could limit theirs by making sure than ATM. and other cards could be used there, And to create awareness on the need for costumers to use it more than cash, 2, the presence of real security men, MOPOL or Army would have to be there too, But the main security problem isn't these gun men as far as am concern, I own just  small business at home too, and i have many of my friends that has something there as well, The main security problem is internal, The worker, From experience man,
On energy issues, Since you re talking about a big business, There's one area we ve not really thought of in Nigeria to limit the problems of power supply in our businesses, SOLAR ENERGY, I can give you every info. you need to get the pros. in the field, I have a friend in Houston Texas, who retired as electrical engineer from COMPAC there in US. He's into this solar thing and is even planning to come home and start the deal in Nigeria any time this year or next, Or, in case if your in CANADA or any where close, you can go to XANTREX, they are the leading solar energy company in the world now, I can tell you for sure, You won't spend up to 10% of what Generator will cost you in 2 to 5 years to build a solar power plant that will last for at list 25 to 30yrs, with maintenance cost of less than 2% of the original cost yearly, And to ask if Nigerians would like a place they can go any time and get what they want and as fresh, am sure it will be another GSM business, In case you need to know more about the solar thing, Am not a pro. but i know people that can do something for you, I know more about it because i have gone to almost every company that produces most of the component in China, That's where i Live any way. richeebecks@yahoo.com

You are a fool for thinking nigerians don't have money to shop in supermarkets - ha? i am amazed.

See his face - who give am rice + dodo to chop?

Have you opened your supermarket ? 2007 is finishing!!

A big supermarket like Tesco will definitely work in Naija.

There is a supermarket called "shoprite" owned by South Africans in V.I.

We need more supermarkets.

Large land, with parking facilities will be ideal. Outskirts of Lagos - you will find cheap land.

This indicates you don't understand the model of hypermarkets. The hypermarket model relies on suppliers, and only provides warehousing and sales automation and marketing. The hypermarkets do not invest in inventory, rather they help suppliers sell their inventories. The price are cheaper compare to local stores because its the supplier providing the inventory and they rely on volume sales, hence economies of scale applies.

Its not a simple model, that anybody that thinks he or she can run a business would be able to do. Do you remember Ames stores in the USA, they were as big as Walmart, and was a twin of Walmart in returns, but where are they today? This is considering, that this guys knew exactly what they were doing and not asking in forums how to go about it or how to do it, or whether it would be successful. They knew the business.

As someone said earlier, stay away from businesses you know nothing about.