Economists say inflation is a persistent rise in prices. It happens when there’s too much money chasing too few goods. Inflation in Nigeria today has become a huge challenge, affecting businesses, consumers, and the overall economy.
As inflation rates soar above acceptable thresholds, companies are navigating uncharted waters to stay afloat.
Inflation is bad for everyone. It erodes the purchasing power of consumers, increases the cost of raw materials, and heightens operational expenses.
For businesses, the ripple effect can be devastating including but not limited to reduced profit margins, lower consumer spending, and the constant pressure to balance affordability with profitability.
The situation is particularly dire for industries dependent on imported goods, as fluctuating exchange rates intensify costs.
However, local businesses are also feeling the pinch due to rising fuel prices, high transportation costs, and an unreliable power supply.
To navigate the challenging economic environment, businesses across Nigeria are adopting innovative strategies to remain competitive and sustain growth.
Promotional discounts and offers have become effective tools for attracting and retaining customers. Companies are leveraging these deals to provide value without entirely sacrificing revenue.
The Place, a popular restaurant chain, has introduced a 20 per cent discount on all rice dishes. This initiative not only appeals to cost-conscious consumers but also drives customer loyalty.
Another key approach is localized sourcing. To reduce costs and support the local economy, many companies are shifting their focus from imported raw materials to sourcing locally.
Unilever exemplifies this strategy by prioritizing local suppliers to reduce its environmental footprint, enhance product accessibility, and create employment opportunities.
The company collaborates with local farmers and suppliers for ingredients and packaging materials, such as sourcing sorbitol for toothpaste from cassava starch through Psaltry International. This is a move that has generated jobs in farming and manufacturing. Unilever is now on track to achieve over 90 per cent local sourcing for its packaging materials.
Businesses are also adopting lean operations to curb rising operational costs. Implementing energy-efficient solutions, renegotiating supplier contracts, and embracing remote work models where feasible have proven effective in optimizing resources and reducing expenses.
Innovative pricing models are gaining popularity as companies seek to maximize revenue during peak periods. Dynamic pricing, which adjusts prices based on demand, is increasingly utilized in the hospitality and retail sectors to achieve this goal. Think of the Detty December report.
Diversification of offerings is another strategy businesses are employing to meet the needs of a broader customer base.
Fast-food chains, for instance, are introducing affordable meal options to cater to low-income earners. Chicken Republic, for example, now offers a simple meal of white rice, stew, and egg, providing a budget-friendly option for consumers.
Furthermore, digital transformation is playing a pivotal role in helping businesses adapt to current realities. The adoption of e-commerce platforms, digital payment solutions, and social media marketing is enabling companies to reach a larger audience while minimizing overhead costs.
This shift to technology-driven solutions is essential for businesses to remain relevant and competitive in the evolving marketplace.
Nigerian businesses are demonstrating remarkable resilience and ingenuity, positioning themselves to thrive despite economic headwinds.
The Place, for example, has transformed a simple discount into a strategic response to inflation.
By reducing prices on one of their most popular menu categories, rice dishes, they not only attract new customers but also promote loyalty among existing ones.
Telecommunications companies like MTN and Airtel have also introduced flexible data plans, allowing customers to access essential services without feeling the full brunt of inflation. Similarly, FMCG companies like Nestle, Checkers Africa and Unilever are packaging products in smaller, more affordable sizes to cater to price-sensitive consumers.
While businesses are adapting, the government has a critical role to play. Policy measures such as stabilizing the exchange rate, addressing infrastructure deficits, and providing tax incentives for local production can help create a more favourable environment for businesses.
For companies like The Place, these efforts are more than survival tactics—they are a testament to the adaptability and innovation that define the Nigerian entrepreneurial spirit.
In the face of adversity, Nigeria’s business community continues to demonstrate that where there’s a will, there’s always a way.
*Elvis Eromosele, a corporate communication professional and public affairs analyst, wrote via: elviseroms@gmail.com
