By Princewill Ekwujuru
Taiwo Williams, is an investment banker and Founder/Chief Executive officer of PricePointe Wholesale Club,a newly established one-stop store similar concept to COSCO, a US based wholesale store. In this interview, he explains the concept of the store and reasons behind its establishment in Nigeria. Excerpt.
What is this entire concept about?
The concept is a formal wholesale store concept; for all intents and purposes it is like taking ‘Oke-Arin,’ or ‘Oju–Oye’ market and putting it in a formal setting.
The goal is to real solve problems for retailers; we feel as though there is this missing gap for retailers, where the retailers are forced to buy quantity of items that they do not necessarily require in order to get the price or profit they need.
So the retailer goes to ‘Oju- Oye’ or ‘Oke-Arin,’ buys in cartoon (s), because they want to get the carton price, and then put a 10 percent price to make a living.
Now we are saying the retailer should not have to carry a carton when he can just buy what he needs for a day or two. He doesn’t need to tie his money down, he wouldn’t need to buy for credit, and all he just buys should be what he needs.
Buying what he does not require is to get his store filled and is not ideal. It is not just ideal to stock and sell some. The solution we are providing here is that a retailer can buy less than a case or carton but still gets the item at a carton price lower than what is obtained in ‘Oke–Arin’ or ‘Oju-Oye’, depending on the market.
What we plan to do is to partner with big manufacturers or their distributor(s), and for those that are without distributors we partner with the outsider distributor(s) to get the same price at which they get from the manufacturer(s).
We are not in the business to make a margin from these products. Whatever we are getting is from what we are negotiating, and you can see we are negotiating to get the best offer.
We make our money from the membership fee that both the retailers and the families that buy in buck will pay. So that is the general thing about the concept, just like any other market when you go in there is not just groceries or imported goods, it’s about everything. For example, we have a huge poultry where price will be competitive and comparable to ‘Oko-Oba’s abattoir prices. We have a bakery where we are targeting to bake bread and sell two family loaves at the same price the distributor will get it.
You know bakers have distributors’ who come and pack a thousand loaves and re-sell it. That is the price that we intend to sell those loaves for. We also have different product categories within the store like Ankara, lace fabric, perfumes etc. So in all these things we are partnering with distributors and manufacturers to make sure our members have the best possible prices as they can get in the open market. Our store is a fully air-conditioned space, it’s an 8,000 square meter space and that is just for the warehouse.
The whole compound can pack about 300 hundred cars, so it is convenient in terms of packing, we open for the retailers as early as 6am, and the plan is for retailers to come in buy what they need for the day.
Those people that sell fruits on the road wake up 5:30am everyday and they go to the market, and buy the items they require, before 10am they are back and open their shops, the next day they go and buy again.
These people with N50, 000, they turnover a million naira a month. The neighbourhood shops with N50, 000, rake in N200, 000 a month. This is because most of their goods are tied down within the inventory.
This means tying down what he doesn’t need, whereas with N50, 000 he can just buy what he needs from us every day.
So we open at 6am to retailers and for the family members who like to buy in buck. Our shop opens from 10am for the middle class family who intend to buy individual items.
These families and individuals like convenience that is what the market has moved to, and for this convenience they pay at a price.
So when you go into a retail store you are not buying one item, but several, yet you are still paying the retail price, these products are marked up anywhere between15 percent to 35 percent.
However, the big brands that you think are the cheapest are the ones that are actually priced the most.
So People are paying way more than they need to pay. Now we are saying why do you need to do that?
You can come here, it is convenient, it is accessible, everything you love is here and the prices are better than the open market. That is the general synopsis of the concept.
As an investment banker, you followed investments and the market, the market is quite promising, but there are some challenges, what is it that attracted you to this market?
So first of all, as someone that spent about seven years in the US and a member of Sam’s club which is Walmart’s version of this model.
I am a member even till today. What I discovered is there are these opportunities that exist in Nigeria.
For example, a project of this size is capital intensive. It is a big project that is why people shy away from it. We have a population base of close to 200 million, of which arguably 10 percent is 20 million people, and are the middle class and above, and lately we have also discovered that a huge population of our Gross Domestic Product (GDP) is driven by retailers.
The mothers and fathers, in terms of number are estimated to be about five million of the population and they buy up to N50, 000 items per day.
If you do the mathematics,it will be obvious that these are the people actually driving the GDP. These are the people the retailers are actually targeting and the remaining 180 million people. They (retailers) are the people that are breaking the bulk and selling in pieces, the ‘Mallam’ on the road, the neighbourhood stores, the kiosk, the market woman these are the people that are actually driving the volume.
Now we are here, and we also observed that those people (consumers/ retailers) are underserved, that is the honest truth. We also discovered that the distributors are the ones that are actually making the money, not the retailers.
The middlemen are the ones making the money, whereas the real problem solvers are the retailers, the retailer buys in bulk; in fact they are the first to buy in bulk, because he needs that price and needs to break it down.
So we saw that opportunity and then we said if a store in Lekki can gross between N20 million to 25million a day in turnover and these are people who claim to buy in retail, the honest truth is that they are not really buying in retail, they are buying in wholesale and claiming the retail profit.
When we saw the opportunity, we made consultations. We went to the market, had conversations and felt there is real need we are going to provide that solution. Then we formed a club like Sam’s club, (a US based consumer club).
What you are bringing to Nigeria is relatively new. It worked overseas. Do you think it is going to work in this environment?
We believe very strongly that it will work and I will tell you why, we are like a Cooperative for co-operators, a lot of cooperatives exist today, and for you to become a member you pay annual fees /dues to become a member, and what does that cooperative do for you as a member? They go and negotiate the best deal for the members.
Let’s take Total, Mobil or Shell or the cooperative of any other company, they probably represent 1,500 members, that doesn’t move the distributors or manufacturers, that number is nothing to them, but when you have us, we are targeting to represent 150,000 people at any point in time, that is the families, the families at any point in time would on average do within N80, 000 to N150, 000 a month on groceries. While a retailer is doing on average N50, 000 to a N100,000 a day, now when we represent those retailers combined with those families then we are a force to reckon with.
We spent a lot of time sampling, discussing with the co-operatives, retailers, the MTN co-operative and others, they really saw the value because they are limited in their reach because of their membership base, but we are not limited, like I said we are a co-operative for co-operators.