British Retail Consortium – International Retailing 2014 – Indonesia and Nigeria – New investment opportunities.

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British Retail Consortium – International Retailing 2014 – Indonesia and Nigeria – New investment opportunities.

John Scott – Head of International Business Development, Debenhams.

Indonesia and Nigeria – new investment opportunities.

Everyone defaults to thinking of expansion through the BRICS re Jim O’Neil Goldman Sachs but they are very difficult – Big countries, big problems.

Now Jim O’Neil says Mexico Indonesia Nigeria and Turkey (MINT) all of which have huge populations and huge forward growth populations and young consumers growth are the middle classes could be a better option. They all have strong geographical positions to drive into other markets but Indonesia and Nigeria are leading growth.

Indonesia is the 4th largest country in the world with GDP making it the 15th largest economy in the world. One of the fastest growing economies in fact. In 2012 it was reported that the 74m middle class citizens would grow to 141m by 2020. The sheer size of this country and its regional nature means governance is weaker and there is likely to be some corruption. That said, 60% of the countries retailers are typically traditional with 40% being much more modern. With only 12 malls in Jakarta and all super malls of 1m sq. ft. plus being built outside the main city, retailers are moving out to more regional areas.

A big issue retailers are facing is that labelling has to be in Indonesian and on garments before being shipped into the country. Legislation is now so tight it is almost un-commercial to meet legislative demands. This will change in time however at the moment, compliance advice is essential for retailers in Indonesia.

The other big player is Nigeria – that said with 50% of its population under 20 years old it is not an easy market. With a population of 174m, it is the 7th biggest in the world and is likely to exceed 440million people by 2050. At this rate, it will enter G20 by 2020. It is a country with huge inequalities and corruption but with growth of middle class that is changing. Political and religious diversity is a real challenge regionally, but is not such an issue in bigger cities. With a private consumption higher than India or Russia it’s no surprise that Debenhams Oxford Street estimates that Nigerians form their second biggest customer and hold the biggest transactional value.

John’s advice is to keep an eye on Ghana as it may be an easier market to break in to.

 

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