A void will definitely be created in Nigeria’s Fast-Moving Consumer Goods, FMCG, sector with Shoprite’s planned departure from the country; just as this development will also create job losses, compounding the already worsened unemployment crisis.
The re-evaluation of the Shoprite Group’s operations in Nigeria, occasioned by the COVID-19 pandemic has indicated that Africa’s biggest grocery retailer is leaving town.
Shoprite, the South Africa-owned chain of stores, will be leaving the most populous African country, after a one-and-a-half decades Shoprite, amidst logistic concerns and the novel coronavirus pandemic and a dip in sales in Nigeria.
The company said in a statement, “Following approaches from various potential investors, and in line with our re-evaluation of the group’s operating model, in Nigeria, the Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited.
“As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time.”
Recall that Shoprite Holdings has reported a drop in its annual earnings, hurt by an impairment charge it recorded during the year.
The Cape Town-based retailer has started a formal process to sell all or a majority stake in its supermarkets in Nigeria.
The South African retailers have struggled in the Nigeria market; earlier, Mr Price exited the Nigerian market after Truworths pulled out as well.
In April, Nairametrics reported that Shoprite Holdings in Nigeria lost 8.1 per cent of its sales in constant currency terms at the end of the second half (H2) of 2019; due to September’s xenophobic attacks in South Africa and reprisals back in Nigeria.
Shoprite Chief Executive Officer, Pieter Engelbrecht, said, “We remain committed to operating on the continent, but are limiting future expansion; whilst we review our options with regards to alternate operating models.
“Notwithstanding this, we have taken a number of immediate operational actions, all of which are ongoing and include rent reductions, store closures, productivity improvements and de-dollarising costs.
“We are confident that in the absence of further currency devaluations and any unforeseen circumstances that these operational measures will positively impact profitability. Looking ahead, the Group enters the second half with ongoing determination.
“Our investment in technology affords us greater visibility and results in better decision making across the business. This, together with the launch of our Xtra Savings Rewards Programme, is significant for the Group and bodes well for a future-fit Shoprite.”
Meanwhile, Nigerians have started reacting to the planned pull out of the country by the retail shop. A Twitter user going by the handle Ayo Bankole, said, “The Board of Africa’s biggest retailer, Shoprite, has announced plans to discontinue operations in Nigeria after 15 years in. While this may open up opportunities for local investors in that sector, it is a bad pointer to what Nigeria has become as an investment destination.”
For Onye Nkuzi, @ccchukudebelu, “The exit of Shoprite from Nigeria should tell you what you need to know about the “size of the Nigerian consumer market” and the economic incompetence of the present administration. Anyway, Leventis and Kingsway Stores suffered the same fate under a previous Buhari administration.”
Kelvin Odanz (@MrOdanz) said, “Mr Price has closed shop and left Nigeria. Apparently, Shoprite too is closing its operations and leaving Nigeria after selling its stakes. Very soon multichoice and MTN might also leave. Buhari is really doing a great job and Nigerians are lucky to have him as President.”
What Shoprite’s exit from Nigeria means to Edward Israel-Ayide is that “Shoprite is leaving Nigeria because Nigerians now have less disposable income to spend at their outlets than before. Poverty is creeping on us all while our Supreme Leader idles and his minions demand we ‘live within our means’.”
For Senator Shehu Sani (@ShehuSani), “If Shoprite wants to stay, they can stay; if they want to go, they can go; it (their exit) will help local supermarkets to grow.”
“Shoprite’s mall-only strategy in Nigeria is faulted, and with growing competition from SuperSaver, Ebeano, D’prince, Hubmart and the rest, their market share will definitely decrease. When last did you buy anything from Shoprite?” aska Wale Adetona, @iSlimfit.