Why Nigeria Was A Hard Nut To Crack for Woolworth

April 27, 2015

In November 2013, barely one and half years after South African retailer Woolworth expanded into Nigeria it called it quits and pulled out its three stores from the west African country citing high rental costs, duties and complex supply chain processes.

Looking back, Woolworth chief executive Ian Moir — who has been at the helm of the company for five year — told Times Live that the retail should not have even gone there in the first place.

“The cost of retail space in the shopping malls is too expensive; the extent of business that is done through markets; the extent to which clothing is bought in the northern hemisphere in Nigeria and the extent to which Woolworths’ northern hemisphere [retail identity] was associated with the brand. All of those factors should have been things that stopped us doing business there,” Moir said.

His quick decision to cut losses and exit Africa’s largest economy might have saved Woolworth some pain in the long run, but did not look good for the company considering that other South African retailers like Pick n Pay and Shoprite are making headway in the same Nigerian market.

Some analysts like Dianna Games of Africa @ Work,  think Woolworths’s failure in Nigeria was more due to poor business strategies than simply Nigeria’s difficult operating environment.

” Nigerian consumers are brand savvy. If they are going to pay higher prices for goods, they want global brands they recognize; brands that tap into their aspirations. Woolworths, and some of South Africa’s other clothing retailers, simply do not fit into that category,” Games said in an opinion piece published by HowWeMadeItInAfrica.

Woolworth is however making good of its investments elsewhere in the continent. Its business outside South Africa accounted for a fifth of its total 2014 earnings.

The company plans to continue its expansion into other African countries and is already buying back franchises in Botswana and Namibia.

Source: AFK Insider

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