Something is happening in China, the land of Alibaba, Tencent and Baidu; Costco, an American warehouse club chain, is in town. The Chinese people could not overcome the joy of going to shop for really great bargains in Costco despite the digital shops in their smartphones! The demand was so huge that the company was forced to “shut down in the afternoon because of overcrowding”. Yes, customers wanted something new: great value.
Costco charges membership fees and uses the money to subsidize prices of items which are typically bought in bulk. Costco stores look simple because it has never been opened to the fashionista way [expensive stores] as it wants to focus on what customers really care about: great value for money.
Back to Nigeria, Nigerians have shown that they like Shoprite predictable quality despite the marginal higher cost compared to open markets. Costco is essentially a Shoprite where only people with membership cards can shop, typically buying in bulk.
Building companies like Shoprite and Costco may not sound fanciful but they are just the type of retail businesses that would be here for long in Africa. Yes, no one will see them as being fashionable but they will be solidly successful. Ecommerce will make the news but physical stores with inventive business models will keep the profits for a really long time in Nigeria.
Of course, very few investors would like to see such business plans when the mantra is that “software will eat the world” even though there is nothing electronic in the Nigerian ecommerce without a national postal service.
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