As the cost of living continues to soar in Nigeria, citizens are tightening their belts and cutting back on non-essential purchases. This shift in consumer behavior is having a significant impact on the retail sector, which is already struggling with high borrowing costs and weakened demand.
Data from the Manufacturer Association of Nigeria (MAN) paints a grim picture. The value of unsold goods in the manufacturing sector climbed from N187.1 billion in the first half of 2022 to N272 billion in the same period this year. MAN attributes this rise to declining consumer purchasing power, driven by inflation and the removal of fuel subsidies.
The Stanbic IBTC Bank Purchasing Managers’ Index (PMI) report further corroborates this trend. Business activity in November dipped to 48 points, the lowest level in eight months. The report states that “companies in Nigeria continued to be negatively impacted by strong inflationary pressures,” leading to decreased new orders and production.
Individual testimonies echo these concerns. Amaka, a consumer, shared, “I have seriously cut down on non-essentials. I buy only what is essential to me nowadays as prices keep surging. My salary has been the same for the last five years.”
This sentiment is echoed by Olumide Ajayi, a teacher, who stated, “Right now, I only purchase essential items. We used to take the children out every weekend to visit parks, but we have stopped doing that since April because we cannot afford it any longer.”
The situation is further exacerbated by rising food inflation, which reached 31.5% in October, significantly impacting the cost of living. This has pushed an additional four million Nigerians into poverty between January and May 2023, as per the World Bank.
With the economic situation showing no signs of immediate improvement, Nigerians are forced to adopt more frugal lifestyles. This, in turn, casts a long shadow over the future of the retail sector, which faces a prolonged period of stagnation and decline.
