WHY SHOPRITE, AFRICA’S LARGEST RETAILER IS CLOSING SHOP IN NIGERIA
Bloomberg reports that Shoprite is considering selling its Nigerian operations. This process was initiated after the retail chain said in November that it was reviewing its supermarket operations outside South Africa and would consider exiting certain countries if that would help reverse regional sales declines.
Shoprite has been battling currency-induced inflation surges in several other African countries. International supermarkets (excluding Nigeria) contributed 11.6% to group sales, and reported 1.4% decline in sales from 2018. South African operations contributed 78% of overall sales and saw 8.7% rise for the year.
As a result of the COVID-19 lockdown, customer visits declined 7.4% but the average basket spend increased by 18.4%.
“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,” the report stated.
While the company’s total sales of merchandise may be on the rise, it is struggling outside South Africa. According to the report, the non-South Africa supermarket operation of the company, excluding Nigeria, contributed a paltry 11.6 per cent to the group sales. Its non-South Africa sales also declined by 1.4 per cent in the year under review. The company blamed this decline on the lockdown announced in several African countries due to the coronavirus pandemic.
“Second half constant currency sales growth of 6.3% was significantly impacted by lockdown regulations across the 14 African countries in which we trade. Lockdown restrictions pertaining to store closures; social distancing; transport restrictions; the movement of people; trading hours; workforce limitations and trade in alcohol impacted various regions to differing degrees at different times.”
In 1990 Shoprite opened in Namibia. In 1998, it acquired the national Checkers chain. … In 2005 the Group acquired Foodworld as well as South African ticket seller Computicket, and opened the first Shoprite LiquorShop.
Shoprite opened its first store in Nigeria in December 2005 and now has a total of 26 stores across eight states in the country including Federal Capital Territory, Abuja. The company also claim to have employed more than 2,000 people in Nigeria, of which 99 per cent of them are Nigerians. Shoprite also claimed to have built more relationships with over 300 Nigeria suppliers, small businesses and farmers.
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