These Businesses Were Recession Proof During The Holidays
Just like in most parts of the world, Xmas and New Year holidays in Nigeria are a period for maximum merriment. Families splurge on gifts, travel, vacation, parties, entertainments, fashion, food, drinks etc. all in the spirit of the season. For most Nigerians, 2016 could not have gone sooner.
The country officially went into a recession in the second quarter of 2016, the exchange rate got pummeled against the dollar and inflation rate is now over 18%. The sour taste of a bad economy is still in the minds of many people as they look forward to a 2017 that everyone hopes will be better. Based on this, it won’t be wrong to think the Xmas and New Year holiday (2016/2017 )will probably be very lack luster.
However, it appears some Nigerians defied all odds and went on to have a rather splendid holiday. The determination of some of these Nigerians to enjoy themselves seem to have benefited some industries over others. These industries could be viewed as recession proof, at least in the context of the holidays.
Cinemas – Nigeria’s love for Cinema has been growing over the last few years. This is buttressed by the billions of Naira in investments going into the Cinema Industry in Nigeria. According to a PWC report, Nigeria’s Box Office Revenue will account for 70% of total filmed revenue by 2019.
Reports reaching Nairametrics from some of the Cinemas visited around the country suggest Nigerians trooped in the thousands to watch movies. An average Cinema ticket in Nigeria cost about N1,500 including free popcorn. Not considered a lot of money by some standards but it clearly shows this industry is recession proof. In a particular Cinema in Lagos, we understand some people queue for over 30 minutes just to grab a popcorn. We also heard some movies sold out multiple times in confirmation that this was one industry where Nigerians wanted to spend.
Live Events– Since the advent of Nigerian Afro Pop in the early 2000’s, Nigeria’s music industry is thought to be one of the fastest growing in the world. While live music is not up to 20% of music revenue in Nigeria, we expect to see this sub-sector grow in the coming years. This holiday buttressed just how important Nigerians take live concerts. From what we gather, most cities in Nigeria where they held live concerts were mostly sold out. In Enugu, Lagos, Calabar, most concert venues were sold out as musicians entertained Nigerians from all ages. Comedians also did not miss out as they also organised their own events and saw some good patronage. Award shows typically held in at the end of the year was also well attended according to reports.
Most offices also went ahead with their annual end of the year parties, inviting musicians to perform live. For us this only means Nigerians will always be willing to spend money just to be entertained. Organizers of these events will see the increase or at least sustained patronage as a sign that their industries are still thriving despite the economic challenges.
Restaurants, Bars, Joints and Clubs – For a while we had thought these class of businesses will be on the downward trend. It would seem that recession will catch up with expensive bars and clubs as Nigerians avoid having to pay high premium on drinks and food just to listen to loud music and dance. Restaurants and bars where Nigerians eat pepper soup and other local delicacies also faced the threat of being poorly patronized due to the recession. We also thought quick service restaurants (QSR) where food like Pizza, Burgers, Meat Pies and other confectionaries are being will also face low patronage.
What we however observed was a surprise, particularly in Lagos. Most clubs were packed full by dance hungry Nigerians. Restaurants, QSRs well located also received good patronage as most Nigerians flocked in to spend quality time with family. Whilst we do not quite know if their spend compared to same period 2015 was higher or lower, we opine that the volume of traffic in these places are indicative of a some level of good business for owners of these businesses.
Supermarkets – With the inflation rate sky-high at over 18% prices of goods and services were expectedly high this holiday compared to the year before. Yet, our scouts also reveal most of the major supermarkets in Lagos saw huge patronage during the holidays. Major Supermarkets like Spar, Shoprite, Ebeano, Grand Square etc. all enjoyed a high level of patronage this holiday than we otherwise expected. Again, we are still gathering information on how much was spent on the average by shoppers, so this is based on the number of people trooping into these shops.
Fashion – Despite the recession, most boutique owners we reached out to informed us that patronage was on the average, above expectations . Whilst fashion items were now more expensive due to the depreciation of the naira, people still dipped money into their disposable income to shop for loved ones. Some attribute this to the fact that most Nigerians did not travel abroad and as such used some of the money saved to splurge on fashion items.
Local Travel – The Federal Government increased fuel price back in may to about N145/litre. The immediate impact was that transportation cost rose in most parts of the country. Despite this Nigerians still left major cities in droves to travel home to their villages and hometowns. Reports from major motor parks around Lagos and in some cities across Nigeria reveal travelers defied the recession to buy bus tickets for the holiday. Roads were also said to busy particularly the Lagos-Ibadan Expressway, Lagos-Ore-Benin-Onitsha corridor, Gboko-Abuja-Kaduna axis.
The recession, high inflation and the depreciating exchange rate might be a burning issue in the minds of many Nigerians but many have still found ways to enjoy. According to the National Bureau of Statistics, compensation for employees in Nigeria generated a real GDP growth rate of -10.68% and -17.58% respectively and -14.27% in the second half of 2016. Despite this it appears people still found ways to splurge. Some might attribute this to high yielding investment schemes like MMM or the fact that most businesses still had enough cash to pay salaries. The point thus remain that, Nigerians appears to have defied the recession to enjoy their holidays.