Credit Sales, Competition, and Business Survival in the Nigerian Flour Market: Evidence from Ondo State, Nigeria | Chapter 7 | New Advances in Business, Management and Economics Vol. 10

 

Selling on credit has long been a traditional practice in the Nigerian flour market. The practice helps to ensure competitiveness and increase sales turnover. In the flour markets, firms are pushed to selling on credit due to flour’s short shelf life, to build loyalty and psychological bonds with customers, and because many bakers prefer credit purchases due to low financial literacy. In Ondo State, over 50% of daily flour sales are conducted on credit, underscoring its dominance in the market. However, in recent years, credit sales have become a source of bad debt and business failures in the market. Despite this, the literature relating credit sales with competition in product markets is lacking. The focus has mainly been on the credit and financial markets. This study attempts to relate how competition impacts credit sales and survival in the Nigerian flour market. Employing a two-stage model and numerical evaluations from sales representatives of 5 leading flour brands, the findings shows that credit sales does not guarantee competitiveness and that it threatens business survival. The study observed a declining link between selling on credit and competitiveness. The study concludes that while credit sales may offer short-term gains in customer retention and turnover, they have become a major source of bad debt in the market, particularly prevalent among small bakeries. Flour dealers need consider business survival as more important goal than sales turnover as default risks rises in the market.

 

Author(s) Details

C. Chris Ofonyelu
Department of Economics, Adekunle Ajasin University, Akungba Akoko, Ondo State, Nigeria.

 

 

Please see the book here :- https://doi.org/10.9734/bpi/nabme/v10/6232