Download Opportunity in RETAILMENT

Opportunity in
RETAILMENT
ARTEE Industries Limited
March 2013

Nigeria – Africa’s burgeoning economy

RETAILMENT – The future

The Opportunity

The Challenges

ARTEE Industries Limited – One of Nigeria’s leading conglomerates
Head points
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NIGERIA – Africa’s burgeoning economy
A brief overview
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Nigeria - GDP (in USD billions)
243.98
228.64
250.00
207.11
200.00
168.59
165.92
145.42
150.00
100.00
GDP % growth rate
112.24
67.65
10
87.84
9
8
50.00
7.8
7
6
2004
2005
2006
2007
2008
2009
2010
2011
2012
8.6
7.86
7.697.72 7.68
7.457.3 7.677.367.69
7.4
5.7 5.7
6.1
6.5 6.7
7.1
6.6
6.17
6.13
6.9 7.1
5
4.5
4
% growth rate
3
2
1
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008
2009
2010
2011
2012
2013
Nigeria – GDP & GDP Growth
Data Source: www.tradingeconomics.com / WORLD BANK
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Nigeria's Global Competitiveness Rank
•
•
Ranked 115 amongst 144 countries
(improved from 127 / 142)
Year
2009 - 10 2010 - 11 2011 - 12
2012 - 13
0
20
Market size ranking – 33
Rank
•
Improved rankings:
Macro Economic environment :: 39 from 121
– Labour market efficiency :: 55 from 70
–
40
Nigeria
60
Lowest Quintile Rank
80
100
120
99
105
111
127
140
114
127
115
115
Nigeria's Ranking - Competitive Pillars
Nigeria’s Global Competitiveness
Health & primary education
Infrastructure
Institutions
Higher eductaion & training
Technology readiness
Goods market efficiency
Innovation
Median rank
Financial market development
Business sophistication
Labour market efficiency
Macroeconomic environment
Market size
Data Source: WEF – GCR :: 2009 – 10, 2010 – 11, 2011 – 12; NESG Research
ARTEE Industries Limited - Proprietary & Confidential
142
130
117
113
112
88
78
73
68
66
55
39
33
150
100
50
0
5
•
•
Amongst the ‘Next – Eleven’ Nigeria ranks
9th. , ahead of Bangladesh & Pakistan
Nigeria's Ranking - Next 11
Pakistan
124
Bangladesh
Amongst the BRINCS, Nigeria ranks 6th.
118
Nigeria
115
Egypt
107
Vietnam
Iran
66
Phillippines
65
Mexico
Nigeria's Ranking - BRINCS
NIGERIA
75
53
Indonesia
115
50
Turkey
RUSSIA
South Korea
67
INDIA
19
150
59
SOUTH AFRICA
43
100
50
0
52
BRAZIL
48
CHINA
29
120
100
80
60
40
20
0
Global Competitiveness :: Nigeria v/s Emerging Economies
Data Source: WEF – GCR :: 2009 – 10, 2010 – 11, 2011 – 12; NESG Research
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Sectoral contribution to GDP : 2010 - 2011
•
Agriculture, Wholesale & Retail, Crude
account for more than 70% of the GDP
Solid Minerals
Hotels & Restaurants
Business & Other services
Real Estate
Building & Construction
Finance & Insurance
Sectoral growth : 2010 - 2011
2011
Manufacturing
2010
Telecommunciation & Post
Crude oil & Gas
Others
Finance & Insurance
Crude oil & Gas
Others
Wholesale & Retail trade
Agriculture
Agriculture
Manufacturing
-
Real Growth (Annual)
5.00
10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00
Business & Other services
Real Estate
•
Wholesale & Retail trade
Solid Minerals
Hotels & Restaurants
Building & Construction
Telecommunciation & Post
(5.00)
-
5.00
10.00
15.00
2011
20.00
25.00
30.00
35.00
40.00
Non-oil sectors like Telecommunication &
Post (34%); Wholesale & Retail (11%),
Hotels & Restaurants (12 %+), Real Estate
(12%+), building & Construction (12%+)
recorded double digit growth
2010
Sectoral contribution to GDP (2010 – 2011)
Data Source: NBS Outlook – 2010 :: 2015
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•
The slow down in growth in 2012 is a resultant
effect of external shocks (slow down in US &
Europe, China); lower output of crude
production, subsidy removal on PMS and its
effect on household incomes
20.00
Projected Real GDP growth are:
–
–
–
•
Projected GDP Growth rates
2013 :: 8.04 %
2014 :: 7.43 %
2015 :: 7.25 %
18.00
16.00
14.00
Nominal GDP for 2012 – NGN 43,134.77 bn, a
15.63% growth over 2011
% age growth
•
12.00
Real GDP
10.00
Nominal GDP
8.00
6.00
•
Projected Nominal GDP growth rates are:
–
–
–
2013 :: 17.28 %
2014 :: 15.53 %
2015 :: 14.19 %
4.00
2.00
2013
2014
2015
The future :: 2013 – 2015
Data Source: NBS Outlook – 2010 :: 2015
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RETAILMENT – The future
The BIG Impact
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SHOPPING MALLS / HYPER MARKETS
RETAILMENT
SUPER
MARKETS
DEPARTMENT
STORES
STANDALONE STORES
MOM &
POP
STORES
STREET
WEEKLY
VENDORS
MARKETS
The Evolution of RETAIL
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In developed economies; the composition of organised retail is much larger than the unorganised retail.
Therefore; it would be safe to presume that ...
Economic growth has a direct correlation to Increase in organised retail
Percentage of Organized Retail:
United States of America: 80%
United Kingdom: 80%
Japan: 66%
Australia: 78%
India: 10%
Nigeria: 3%
The Organised Retail Industry – A macro overview
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
27% of the Global GDP
is contributed by organised retail; 20% of the US economy is
supported by retail

Across the globe; retail employs 17.1% of the workable population and in the US it accounts
for 14%

Organised retail supports the development of various sectors across the economic environs of the
country

Organised retail conserves foreign exchange
The Organised Retail Industry – A macro overview
Source: Retail Trends and Economic Dependencies – www.marc.org
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The
BIG IMPACT of Retail
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
Current estimated yield loss is around 39% primarily due to an inefficient value chain & cold
chain

Effecting a loss in earning and increase in cost
 Organised retail would help improve the
efficiencies of the value chain
- Reduces wastage
- Increase revenue
- Effectively lowering down inflation rates
RETAIL & AGRICULTURE
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
Organised retail helps increase the presence of
brands in all categories

Launching of new products & concepts to test
markets leading to eventually setting up local
manufacturing facilities
 Manufacturing infrastructure improves as
technology transfer is facilitated
 Creates an improved platform for direct
interaction with the consumers
RETAIL & MANUFACTURING
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•
Organsied retail is the major impetus of realty
developments
–
•
India case study:
•
2001 – 142,000 m² of modern retail
•
2006 – 2.7 million m²
•
From 30 malls in 2003 to 230 malls in 2007
Organised retail has moved from mere shopping
to ‘RETAILMENT’
RETAIL & REAL
ESTATE
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Case Point 1
Increase in organised
retail
Increase in consumer
spend
Increase in consumer
finance
Increase in capital
investment
Increase in project
finance
Case Point 2
Increase in organised
retail
SME Finance through a Supply Chain Contract with major Retailers
RETAIL & BANKING
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
Technology is the backbone of organised retail

The boom in retail will give an impetus to the IT
industry in sphere of both hardware and software
development

Increase in telecom and IT infrastructure
facilitates a cashless economy
RETAIL & TECHNOLOGY
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 Organsied retail helps develop the value chain
in the system
 Value Chain entities are SME drivers
 Development of ancillary units
RETAIL & SME
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
Organised retail is by far one of the single largest
employers in any economy

In developed economies, 30sqm is managed by
one person
 Organised retail generates 17% of total
employment globally
 Organised retail develops entrepreneurship
Franchise model
employees become
employers
RETAIL & HUMAN
CAPITAL
ARTEE Industries Limited - Proprietary & Confidential
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
DUBAI ::




2010 – 10 million tourist
2015 – Estimated 15 million
25% - 40% visitors to Mega malls are tourists
Average spend is 2 – 3 times higher than residents
 Organised retail and tourism are
interdependent
 In Nigeria organised retail will develop domestic
tourism
RETAIL & TOURISM
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TAX - Agriculture
Sector

Organsied retail increases the revenue base for
the government
TAX - SME
TAX - Manufacturing
TAX - Real Estate
TAX Technology
TAXBanking
GOVT.
TAX
INCOM
E
RETAIL & FEDERAL
REVENUE
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RETAIL Industry
Broad Market Sizing
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Zone
Food Exp
% age of
Food Exp
Non-Food
Exp.
% age of
Non-Food
TOTAL
% age of
TOTAL
North –
Central
2,395.704
15.27
1,138.410
13.29
3,534.114
14.57
North –
East
1,942.853
12.39
763.166
8.91
2,706.019
11.16
North –
West
3,938.239
25.11
1,459.677
17.04
5,397.916
22.26
South –
East
1,935.051
12.34
984.137
11.49
2,919.188
12.04
South –
South
1,908.387
12.17
1,628.646
19.24
3537.033
14.67
South –
West
3,566.435
22.74
2,573.147
30.04
6,139.582
25.31
TOTAL
15,686.67
8,567.00
24,253.67
Nigeria – Consumption pattern
•Figures in NGN billion
• Source: NBS 2009/2010 Consumption Report
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2012 – Total no. of International
Travellers :: 2.90 million
Average spend per traveller – USD 4000
TOTAL Outflow of FX – USD 11.6 billion
Nigeria – FX Spend
•Estimated figures based on secondary research –
Source - FDCL
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In South Africa, a leading grocery chain (world’s largest) closed 2011 with a
turnover of USD 6.00 billion
This chain constituted 850 shops, and amassed a market share of 25%
The TOTAL GROCERY RETAIL SALE in SA for 2011 – USD 24 billion; comprising
3800 outlets
TOTAL South African Population – 65 million
TOTAL SHOPPER Population – 45 million
South Africa – A retail comparison - I
•SPAR SA – Handbook 2011
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THE RETAILMENT FIGURE for SOUTH AFRICA
• Grocery Sales
–
• Fashion / Electronics etc (ratio presumed 1:1) –
• Entertainment (avg spend ratio to grocery 1:4) –
• Food / Restaurants' etc (1 : 4 ratio)
–
• AN ESTIMATED TURNOVER OF
USD 24 billion
USD 24 billion
USD 6 billion
USD 6 billion
USD 60 billion only from
RETAILMENT
South Africa – A retail comparison - II
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The Challenges
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
RETAIL … recognition as a ECONOMIC SECTOR

Infrastructure

Consistency

Human resource
The Challenges
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ARTEE Industries Limited
Credentials
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•
Started in 1988 … one of the first organised supermarket in Nigeria … 250
m² ... branded as
•
2011 – Nigeria’s largest Supermarket & Department Store with presence in
Pan – Nigeria and in excess of 20,000 m² of retail space
•
Evolved as the most comprehensive supermarket and department stores in
Nigeria
Genesis & Evolution - RETCO
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2010 – SPAR Nigeria introduced
Evolution – RETCO
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ARTEE
Group
PROPCO
Residences
Commercial
RETCO
SPAR
MANCO
PARK – n SHOP
Furniture
Table Water
& PET &
Preforms
Business interests
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Started in 1999; with over 6,000 m², CASCADE is
one of the leading brands of Table Water in
Nigeria
2006 – the largest & the most comprehensive
furniture manufacturing facility in Nigeria spanning
over 10,000 m² and over 85 CNC machines. This
facility was commissioned within 11 months of
starting the project from scratch
MANCO
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Developing one of the largest community type living
residential complexes spanning over 23 hectares –
50 houses built within 12 months of start of work
2010 – Ultra modern shopping complex measuring
over 6,000 m² completed with 14 months of start
PROPCO
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The opportunity is there for the taking
But will only happen if we make it happen
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Thank you
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