Retailers Struggle with Restocking Woes as Regulations Continue to Pose Challenges (International Edition)

Retailers Struggle with Restocking Woes as Regulations Continue to Pose Challenges (International Edition)

April 12, 2025

Once more, Small and Medium-sized Enterprises' stakeholders are sounding the alarm about their difficulty in replenishing stock, particularly within shopping centers and retailers nationwide.

The operators pointed out several regulatory obstacles, reduced availability of credit, emphasis on foreign currency, and consistently high inflation as the primary reasons for the growing scarcity of goods on the shelves.

This new outburst comes after an initial report by The PUNCH In October 2024, this highlighted how economic stresses such as foreign exchange volatility and elevated inflation rates significantly impeded retailers' ability to restock their inventory.

The president of the Nigerian Association of Small BusinessOwners, Dr. Femi Egbesola, stated The PUNCH The recent rules implemented by the Standards Organisation of Nigeria have made it more difficult for stores to replenish their inventory as they did previously, adding to various other difficulties they face.

One reason behind the empty shelves is that SON imposed a regulation on shopping centers and grocery stores stating that as of March 1, items lacking SON certification mustn’t be shown in these venues," Egbesola explained. "Prior to this ruling, only a small number of goods were certified by SON—most were approved by the National Agency for Food and Drug Administration and Control.

He criticised the policy as a duplication of efforts, adding that “malls refuse to collect products from SMEs that do not have the SON number”, and even those willing to comply “may wait three months or more” to get certification.

The president of ASBON observed that this development has resulted in numerous small and medium-sized enterprise (SME) products being removed from store shelves, since "these businesses are increasingly pushed out of sales channels like shopping malls and supermarkets."

He stressed that the regulation adversely affects both manufacturers of goods and retailers since "many of the items that would typically be available in the mall are now missing." He added that this situation is not favorable.

Esgbsola acknowledged an additional issue: the increasing expense of credit and unfavorable payment conditions. Many shopping centers require local purchase orders but delay payments for as long as 90 days. "Given the economic instability and extremely high-interest rates, it becomes exceedingly challenging for small and medium-sized enterprises to finance their production when they have to wait up to three months for reimbursement," noted ASBON’s president.

Small and medium-sized enterprises address this issue by exploring alternate markets, such as export opportunities, which appear more lucrative.

Although meeting the requirements for international communities is challenging, we can now sell to African nations via the African Continental Free Trade Area," Egbesola noted. "This increases profitability since the exchange rate stays in dollars, and dollars hold significant value in Nigeria.

Thus, small and medium-sized enterprises now opt to sell their goods within other African nations, earning foreign currency before returning home to convert it into Naira."

As smaller enterprises look towards global markets, Nigeria’s micro, small, and medium-sized businesses are rapidly declining due to continuous setbacks in the local manufacturing sector.

Egbesola states, "The count of micro, small, and medium-sized businesses operating within the actual sector—specifically in manufacturing—is decreasing daily. This decline is reflected in the current state of the malls."

He pointed out that numerous small and medium-sized enterprises lack the necessary raw materials for their operations since they obtain these from international sources. He highlighted issues related to accessing credit and competing with bigger companies for foreign currency.

It poses significant challenges for MSMEs to effectively compete in the marketplace," Egbesola stated. "Accessing dollars for purchasing raw materials is essential. Often, small and medium-sized enterprises struggle to obtain dollars or foreign currency through the conventional channels like commercial banks.

"Once we reach the black market to acquire dollars, purchase them, and transport them back into the country, we realize that competing is nearly impossible as our costs become prohibitively high when contrasted with those of major corporations and factories which have direct access to foreign exchange through commercial banks and thus can offer more competitive rates," he clarified.

Egbesola proposed several advancements for SMEs to address their restocking issues, such as leasing vacant areas to micro-merchants or implementing multi-purpose approaches to enhance earnings.

He clarified, "If there are vacant areas within my shopping center, could I lease them out as sublets? Could I invite someone who specializes in selling yogurt or parfaits to occupy those spaces?"

Could I invite someone interested in selling fragrances to set up shop there so that I won’t bear all the operational costs alone? Such strategies are among the fundamental approaches shopping centers can adopt to overcome the difficulties currently faced by small businesses.

He similarly urged shopping centers to assist small and medium-sized enterprises (SMEs) through lenient loans to comply with regulatory standards. "Could they provide loans to these SME suppliers so they can register with SON?" questioned ASBON’s president.

Egbesola additionally urged the mall operators to unite and speak with one voice. "Should they combine forces, it would simplify the process of addressing their issues to the government," he stated.

The Director of the Nigerian Association of Small and Medium Enterprises, Eke Ubiji, voiced comparable worries.

Ubiji pointed out that even though the rebased Consumer Price Index has lowered the inflation rate to 23.18 percent, high costs continue to impact retailers and small businesses.

“Prices for most items have skyrocketed beyond the stratosphere,” Ubiji remarked, connecting these increases with a decrease in customer purchases and longer intervals between stock replenishments.

He noted that when restocking, one should factor in the expenses associated with acquiring new inventory. If these costs are too steep, it could impact the customers who frequent the suppliers.

Regarding the SON certification policy, Ubiji recognized its effect on supply chains. He stated, "Starting March 1, this new rule stops suppliers from stocking items without SON certification," adding that this was "a valid cause" for numerous vendors pausing their activities.

Ubiji, nevertheless, recommended that mall operators implement appropriate internal compliance mechanisms, noting, "It is essential to conduct thorough internal checks before allowing individuals to sell their goods in a mall, ensuring that these items adhere to safety regulations," he emphasized.

He encouraged retailers to demand top-quality items from suppliers to boost sales via word-of-mouth endorsements.

There are specific criteria that retailers ought to meet. This includes not only the development of the mall itself but also how merchandise is presented for customers who intend to purchase items at this location," said the Director General of NASME. "Shopping mall proprietors must establish an oversight body tasked with ensuring vendors adhere to safety regulations concerning the goods they wish to offer within these centers.

If you achieve this, visitors coming to purchase your items will inadvertently promote your business by sharing, 'If you seek high-quality goods, visit that shopping center.'

Provided by Syndigate Media Inc. ( Syndigate.info ).
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