Sector Analysis of the Nigerian Clothing Market

Sector Analysis of the Nigerian garment commercialiseINTRODUCTIONThis section of the report is divided into segments and Im going to look into the field analysis of the Nigerian robes grocery store finished online selective informationbases, company reports, magazines, diary and invigoratedsletters. Kotler Gartner (2002) claim that PEST analysis is a functional considered in additionl for appreciation securities industry exploitation or decline, pains position, potential and direction for operations. In this report PEST analysis of the macro milieu allow for be carried proscribed to explore the f achievementors that do work company policies and Porters five military forces will be utilize to understand the emulous environment of the labor.PEST analysis beautify the political issues of a res publica which has to do the rules and regulation goerning sparingal forces which encompass the talk terms situation and consumer purchasing designings, interest grade and taxes. bordering is applied science which comprises of product development, innovation and inventions in the diligence, online advert and new distri besidesion methods. Fin completelyy social forces consist of change in life style, religion, spurt and roles models.Macro-environmentThis consists of the companys business suppliers, market place intermediaries, purchaser markets, competitors and the public (Kotler 2004.p107). The closely general layers of these environments be application or sphere and organisation which atomic number 18 again extend tored to as macro-environment. Thus, this consists of huge environmental cistrons that touch on to a greater or lesser extent on an organisation. It is important to build up an understanding of how changes in the macro environment ar equally to impact on a sphere. These symbolize the uncontroll fit circumstanceors of a business and how these calculates (PEST) affect the Nigerian raiment patience is discussed below .Political ForcePolitical forces play a resilient role in business and it tramp be refer to the fall sum of political, consumer protection, environmental regulations, implementment law, competitive regulations, political trends, legal and regulatory forces which argon enforced by the courts and regulatory agencies and be capable of despotic a companys marketing decisions and strategies (Dibb S. et al 1997). In Nigeria precisely, at that place atomic number 18 threesome main forces that fool up the political environment and they atomic number 18 executive director branch, legislative branch and judicial branch. It is necessary and mandatory for an organisation to annoy to political rules and regulation goerning their twenty-four hour conclusion to day business activities of the country (Brassington F. 2006)Nigeria today has an extended hark of prohibited items. correspond to Business day (2009), Nigerian has up to 80 prohibited items in its prohibition list while co untries like Sierra Leone, Congo and Guinea cast none. Further much, Senegal has 4, gold coast 19, Republic of Benin 10, Cameroon 13 and Gambia 1. In Nigerias import prohibition list items such as sugar, sweet, soap, fruit juice, textile fabrics, spot, tooth paste, envelopes, mosquito nets and biscuits. This is in short translate plain because of inadequate capacity accounted for by the harsh operating environment. In the fountain of textiles, the most unfaltering of them all, Nigerian had over 120 textile componenties in 1980 and this period was refer to as the era of textile boom in Nigerian. But recently the figure has dropped to 45 as a dissolving agent of productive capacity of the arena which is so low to the point that close to 90 percent of textiles/fabrics require of the country atomic number 18 being ply through importee (Business day 2009). tally to the (Mail and Guardian 2009), Anyanwu, founder of the Ogodo label, utter the industry began stirring only wh en Olusegun Obasanjo banned signification of alien c plenteousnesshing in the late 1990s. Anyanwu progress stressed that, this forced designers to look inward and discovered their capabilities, and that the company Ogodo, implication Igbo for article of habiliments of solid smell was founded and premiered at Nigerias mold week in 2006 (mail and guardian 2009).The Nigerian government has banned the importation of printed fabric/textile products from entering into the country in opposer(a) to guard its own ailing industries in Nigeria (BBC 2002). In spite of the outlaw on importation of fabric or c dance bandhing by the Nigerian government ever since the new democratic dispensation, there is still an attach in the purchase of foreign products like clothe by Nigerian consumers. Further more(prenominal) the law was implemented to enable the topical anaesthetic industries to thrive in the precise competitive clothing market and to discard increasing film of foreign g oods in the Nigerian market (BBC 2002).The Nigerian market is proliferated with the importation of foreign labels which already require world large-minded recognition, Okechukwu (1999). Importation of clothing goods into Nigeria a lot poses threat to the local manufacturers whose products are relatively unidentified in the country. However, there is no efficient regulatory body that governs designers. In the West and southerly part of Africa, stakeholders in any specialized industry form regulatory bodies whose primary tasks include providing resources for members, engaging in public guidance dogma and governmental relations with the regulation of compelrs of tog, and establishing suitable industry practices to stay competitive both locally and abroad.Although, banning the importation of textiles/fabrics was meant to provide leverage for Nigeria in its dealings with its trading partners. In fact, the 1977 ban, for example, was the result of what the government deemed a self-s ustaining Clothing and Textile industry. The government, arguably, got it right. As of 1980, Nigeria was ranked the third largest textile industry in Africa after Egypt and South Africa (Uduak 2009).Enforcing increased of government regulation in the Nigeria parsimony today, the rising price of oil, parley advancements and travel options ca-ca all led towards a growing market for brand names products in Nigeria. Moreover clothes is a prime product since it was geared toward customers in third world country where the per capital income was extremely low. From the continent of Africa, there was a war in Abeokuta, involving the Yorubas in western Nigeria. This war was the result of them Yoruba rejecting to wear items brought from the British Colonists and their preference to locally make Nigerian clothes and Yoruba outfits with the reason that it represented their subtlety and custom (Jean 2004p.256).Bayfield cited in Jean (2004) argues that their act visibly illustrated to compo und authorities those elite were not only cathode-ray oscilloscope themselves apart from colonial authorities and values and excessively showing commitment both political and cultural to being Yoruba. Precisely, in Yoruba community, the types and attribute of clothes they wear are significant and a Yoruba wardrobe includes merchandise textiles, Such as velvet and locally woven (Jean 2004p.256).Economic forceIt is important for every firm to know the economy of the country were they exercise in other for the business to expand. The factor of Economic forces make up marketing environment and it consists of issues ranging from effects of the present day sparing topographic point in a country which are caused by the forces of acquire power, consumption, supply and demand, and spending patterns. The factors mentioned determine the success and growth of any organisations marketing strategies but which are uncontrollable by the organisation (Dibb S. et al 1997).The Nigerian econo my has been experiencing growth for the past 10 years which has brought light to Nigerian (GMID 2005). The Nigerian consumers are becoming contrive conscious due to the new fashion trends and development in the participation today. A majority of adult and middle-aged consumers have developed tastes which are comparable to those of their counterparts in developed countries, as a result of the advent of satellite communication and internet which has supercharge do the diffusion of information and knowledge easy to r all(prenominal) out to the Nigerian universe. This reason partly accounts for the elevated spending on clothing as indicated in a plain that was carried out by (GMID 2005).Again, GMIDs study in 2005 about the Nigerian consumers spending pattern collapseed that a greater proportion of their total income is spent on clothing, which is ranked third, (5.36%) after diet and shelter with 56.42% and 8.89% loveively.Realistically, Nigerian locally make clothes are cheaper as fence to the imported ones as the cost of labour is comparatively low and the materials used are internal. Also, considering the cost of importing foreign good, and its associated duties at the countrys ports undoubtedly makes foreign goods including clothing deer to that of the traditionally made ones.One important factor which could influence the consumption pattern of the Nigerian consumers in the clothing industry is the income take aims. As a developing country, with a per capita of $2,300 (Siakhenn, 2008), coupled with the current global scotch crises, which has crippled employment, and making more redundant, Nigerian consumers might be Sceptical about spending, especially on more fashionable cloths, but which will be affected the most, local or imported?The Nigeria pecuniary system of rules is based on crude oil, agribusiness and trades due to the displacement of colonial rules in late 19th century. The necessitate to pay taxes to the colonial government forced Niger ian farmers to restore food-producing crops with cash-producing crops, the Nigerian government unflinching to reduce their prices in other to resolve profit.Although the Nigerian petroleum industry developed in 1960 and 1970 has brought a massive increased exporting agriculture products, infrastructure, earnings, social service and huge investment in industry. In respect of this situation many large investments often joint venture with closed-door corporations.The Nigerian gross domestic product was improving in 2007 with $ one hundred sixty-five billion. In respectively the gross domestic product has a wide range, most times depending on the oil market at that period because it varies like in 1985 it was $81 billion, $33.2 billion in 1994, $40.5 billion in 1995 this was increasing yearly and the total GDP per capital was $1,118.20 which was among the lowest in the world. The less privileged experience hard slap due to the Nigeria economic problems and importation of goods were ex pensive (Stock 2009).Company in Nigeria today are expend due to the fact that Nigerian consumer now patronize locally made clothes, this clothes are relative cheap and affordable which have good values for money, In respect of this the Nigeria consumer barging power of consumer have increase over time. Furthermore, the interest rate has an effect on different magnitude on each of the monetary total. Examples if there are soaring interest pass judgment in different country of origin it will affect the Nigeria economic and price rates of product will be expensive, due to the fact that these goods are imported into Nigeria.Social forceSocial force is very necessary in business and it encompasses factors like culture, customer demographics, attitudes and how opinions are being formed (Brassington F. 2006). Thus, this social force has help marketer to study consumer buying pattern, motivation and consumer behaviour.In Nigeria Clothing symbolizes religious affiliation, in spite of the Nigerian limited disposable income consumers are able to spend most of their income on amusement, holiday and fashion which are the things that are significant to working class. At this phase of their lives, they have no responsibilities and little or no savings. Thus, they can whence spend all the income they earn. The young adults group in Nigeria has a relatively low purchasing power because most of them are however starting-off on their own. As a result, they tend to spend their income on more tangible goods such as cars, apartments and clothes. Though they are mindful of fashion, they are more conscious spenders than the studying age consumers. The middle-aged adults have higher(prenominal) purchasing power as they are more established in their careers and have attained some level of financial success. This group consequently are able to afford more luxurious clothing items (GMID 2007). These classifications will be useful for evaluating the discrepancies between the mingled age segments. Generally in African fashion it is well cognise and it is treated more like as a cultural experience. The Nigerian society has frowned on fashion design as a serious profession. In reality norms and attitudes reveal a degrading you cant be serious attitude towards fashion.Clothing industrial in Nigerian society is blooming especially foreign label clothes because it differentiates the rich from the poor, due to the exposure of the western culture most consumers that go to other country of origin for schooling, working or business preferred their lifestyles and the ways they dress because it makes them expose (GMID 2007) The consumers buying pattern has change over time, they younger adults in Nigeria prefer to wear be go around outfit and latest shoes due to the kinds of events and occasion they are attending, this reasons usually influence younger consumer to purchase. Furthermore most of the consumers in Nigeria are being influence by lifestyle trends and role mod els because in the society there are always news trends and development, this consumer want to meet up to received by dress according to roles models.Technological applied science plays spanking roles in an organisation and it is constant to change in nature, it is necessary for and system to follow the trends of technology so that the organisation will not be lacking behind. Technology has being so benefits to firms it terms of advertising, innovation processes and quality control.Technology has helped the fashion industry to improve tremendously. Since 1960 the Nigerian internet sector has suffered delay by the countries immature infrastructure, but recently things are changing as rivalry intensifies and new internet technology has been able to generate wireless wideband access across different state in Nigerian.Thus, Nigeria has experienced a large increase in Internet and broadband use over the past 10 years. And Improvements in technology has made broadband more addressab le and faster through the use of communication industrial like liquid telecommunication network MTN, Nigerian mobile communication M-Tel and Globacom Glo which has increase the use of information explore engines and has made it easier for consumers to search through different web sites and this makes it easier to reach customers as well as making it easier for customer to access disputation. Therefore the technology has improved and the system and usage of communication in Nigeria. Statistics show that in 2000 the estimate population of Nigeria was 142,895,600 but the internet users were only 200,000. In the year 2006 there was a vast increase on internet usage and population growth in Nigerian. Thus, the population was 159,404,137 and the internet users rose to 5,000,000 (GMID 2005) which was a huge development.Technology is fast improving in the Nigerian economic with the effect of broad brand and wireless internet different purchase has being made and customer has also use th is median to check what is happening in the fashion industrial and the new fashion trends. Furthermore companies like Collectibles in the fashion industry of Nigeria have been able to use the internet technology to publicize and advertise their different brands of Nigerian products and this has created awareness in the country. Thus, discordant consumer has made has made order for different verity of clothes through online because it is ease to access. Majority of the fashion industrial in Nigeria has an online fink in other to prevent query and crowd. An examples like during sales in Nigeria most consumer purchase their product online in other to reduce querying up in shop.Moreover, the pass on of technology to the society of Nigerian has help the fashion industrials and other business in the countries in term of high volumes of production rates which has made establishment to grow and also companies has use the median of technology to advertise their various goods and service t o the public which has created awareness and high volumes of sales. Thus, the impart of technology has made industrial to know the numbers of manpower to employ and be utilize per day.Competitive EnvironmentThe clothing Industries in Nigerian are faced with lot of competition. There are a lot of locally made fabrics that are popular in the market and also other retail sellers travel outside Nigeria to other countries to like chinaware to shop. This is because they can bring down cheaper goods and other option when they come back they make their products cheap, affordable and enlighten in order to satisfy customer needs and wants. Thus, Nigeria likes fashion and there are lots of boutiques in the country meaning competition is quite high, though the quality of these goods does not match that of Collectibles the best fashion industry in Nigeria.Abe is huge market in Nigeria which is known for fashionable clothes outfits and accessories their product are usually called Made in Niger ia goods. In Nigeria, the community of Abe everyone has a sewing machine which the used in sewing clothing and consumer patronize them. A lot of shops in Nigeria get their clothing items from Abe, which is a local fashion market in Nigeria and they resell them in the other shops, these are Nigerian made clothes.There are also a large range of bigger Fashion outlets which has various branches across Nigeria such as Collectibles, Marbella culture, Charlotte Andrews collection, Bibis couture, De javu essence, Dee top choice, Wranglers and yeside fashion store. This means the level of competition in the fashion industry in Nigeria is very high. In analysing the competitive environment of clothing industry, Porters Five Forces model will be used. This model will help us have a repair understanding of the competitive environment because the Porters five forces model does not secure agree that competition is about direct competitors but it encompasses the entire porta of all future indi rect competitors (Brassington F 2006). Which are based on five factors and they include intensity of rivalry, new entrants, suppliers, buyers and substitutes (Jobber 2007).Intensity of rivalry in the Nigerian clothing sectorIn traditional economic model, challenger among rival firms drives profit to zero. The intensity of rivalry is a necessary factor when analysing the competitive environment because it deal with number of factors that companies have to understand sooner going into the industry for business and they include structure of the competition, structure of costs, degree of differentiation, switching costs, strategic objectives and exit barriers. This made firms strive for competitive advantages over their rivals and this can be achieved through creation of relationships between quality, supplier and clothing industry.The intensity of the rivalry in the clothing sector in Nigeria market is really fierce. As theres forego movement of goods to Nigeria from the African un ion, and also with the inflow of Asian clothing shops, the competition for market share is intense (GMID2008). Collectibles has a number of rivals in clothing sector like Yeside fashion, Marbella culture, Charlotte Andrews collection, and De javu essence. Wranglers are seemed to be in serious competition with collectibles fashion industry. A wrangler has been able to attract consumers by creating its own brand clothing labels and stylish shoes which collectible has taken the lead in it. Through this median companies are obeying the laws passed on them by the government. This has increased the intensity of rivalry in the industry because most of the company are working towards common goals to become a market leader.Threat of new entrantsNew entrants in business have a way of raising the level of competition in a particular industry and in turn reduce its attractiveness. When an industry has too many companies competing against each other, this can be the reason for its unattractiven ess and this can be as a result of the low incoming barriers that some industries have which makes entry easy (Jobber D. 2004). Furthermore, Kotler 2004 in his writing stated that new entrants to industry bring new capacity and new ideas, the aspiration to gain market share. As a result of this the new entrants in industry the competition will be the higher and this could change major determents market environment like price, customer loyalty and market share.Furthermore, within the Nigerian clothing market, the possibility existing or new laws restricting new entrants seems stripped especially with current globalisation and the African Union enabling free movement of goods. Aside from external forces, there is also possibility that local investors will invade the clothing market, due to the lucrative nature of the sector (the collectible fashion).This is well explained by the rapid growth of Chinese products in Africa and more importantly, in Nigeria. A BBC (2005) article titled should Africa embrace china, confirmed that developing countries are gradually becoming the real victims of Chinas economic progress with goods, especially clothing, being imported into counties including Nigeria.Collectible has a strong attendance in the Nigeria market and has gained the attention of large population of Nigeria consumer which make it very difficult for new entrants to break into.Threat of substitute productsAccording to five porters models substitute refer to products in other industrials and when an establishment has lot of substitutes it makes it unappealing to the consumer because they can easily switches from one product to another. The main factor behind substitutes in clothing market is the price and the style. Majority of consumer are attracted and motivated by the price of the products in the shops because most of the shops frequently have offers and sales promotions on products which attracts customers. The current price war among various shops in Nigeria has left smaller retailers having a difficulty in setting prices to be as low as leading retailers like collectible. Most shoppers are motivated by price and will substitute their regular shop for the next which offers a more attractive price list.The free entry and exit within the Nigerian clothing market, coupled with the greater importation of foreign clothes and the greater number of local clothes traders gives the consumer a number of choices. Threats of substitutes are really high and this has a significant impact on the prices and more importantly the power the consumer has. More substitutes mean that the customer has options, which, as noted by Porter, means that one producer cannot influence the market by ruling prices. In order to match each others competition strategies, due to the threats posed by substitutes, shop owners resort to various promotional strategies, which are normally prices wars.The bargaining power of suppliersSupplier power is a reflection of buyer power and it represent a merry roles in industry competitive environment because if the bargaining power of suppliers is high then this will have an effect on the firms profitability this is as a result of increase the in cost of raw materials and later the cost of finished products(Jobber D. 2004).Clothing market are increasing the standard of quality on their products which they get from suppliers and this has affected the relationship between retail companies and their various suppliers who have not been able to keep up with the new quality standard they require. The bargaining power of suppliers in Nigeria is really low. As noted by Porter (1979) when the bargain power of the suppliers is high, prices go up. This is the opposite of the Nigerian clothing sector. This is because though suppliers may be limited in number most clothing retailers have their own manufacturers which are an total part of their business. Thus most retailers use own brand/label, and this further echoes why the customers have such a high bargain power.BuyersAccording kippenberger (1998) states that it is often useful to distinguish potential buyer power from the buyers willingness or incentive to use that power, willingness that derives mainly from the risk of failure associated with a products use. Thus, Buyers refer to customer who patronise an organization and usually have more buyers bargaining power. (Lynch 2006). The size and concentration of customer is very vital and also buyer powers are very necessary because it influence the factor in clothing market as a result of high level of heterotaxy of retailers.With the huge daily influx of clothes as explained above from overseas and with the existence of locally made ones, the bargain power of the Nigerian customer is really high. This is again backed by the fact that the number of choices available to the customers tends to drive the cost of clothes down in the country.Conclusion of sector analysisThe sector analysis comprises o f pest analysis and porters five forces conjecture which been use in this framework and it has help to analyses the Nigerian clothing market and also able to check the barriers and limitation of the market. In this analysis, secondary data was used to find out more information of the industrial and the knowledge of consumers towards foreign and locally made clothes which has giving the research more ideas to carried on to the next chapter which is the literature review.