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South African retail giant Shoprite to sell Nigerian unit 

Monday August 03 2020
shoprite

A Shoprite store in Kano, northern Nigeria. The South African retail giant plans to sell its Nigerian unit. FILE PHOTO | AFP

By MOHAMMED MOMOH

Abuja

South African retail giant, Shoprite, plans to sell its stake in the Nigerian unit, bringing an end to about 15 years of operations in Africa’s most populous country.

Shoprite announced the planned exit in a trade update titled ‘Operational and Voluntary Trading Update (52 Weeks Ended June 28, 2020)’, saying it has been reviewing its business and had received bids from various investors.  

“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 discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time,” the retailer said. 

Shoprite reported a 6.4 percent increase in total sales to $9.08 billion (R156.9 billion) in the full year to June 28, despite the challenges posed by the Covid-19 pandemic. 

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While the retailer recorded sales growth at home, it is struggling outside of South Africa. 

According to the update, supermarkets outside South Africa, excluding Nigeria, contributed a paltry 11.6 percent to the group sales, a 1.4 percent drop compared to previous year.

“Second half constant currency sales growth of 6.3 percent 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,” said the retailer.

Shoprite launched operations in Nigeria in December 2005 and has 26 stores in eight out of 36 States with about 99 percent of its 2,000-workforce being Nigerians. 

While the supermarket chain did not disclose its suitors, Nigerian investors are reported to have been angling to buy into Africa’s largest retailer. 

REACTION

Shoprite’s announcement attracted mixed reaction in Nigeria including former Kaduna Central senator Shehu Sani who tweeted: “If Shoprite wants to stay, they can stay: if they want to go, they can go, it 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?’’ Wale Adetona posed on Twitter.

“Aside from the political bottlenecks and chaotic business strains associated with doing business in Nigeria, one other silent contributing factor why Shoprite is closing down, is staff theft. In 2017 alone, a sales girl stole 553 million Naira ($1.45 million), one month after securing the job. There are many,” claimed Samuel Otigba.  

Onye Nkuzi added to the debate saying 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,’’ he alleged.

“(Shoprite’s) pulling out of Nigeria and launching a formal process to sell their stake is a testament that South African listed companies have found it challenging to do business in Nigeria,’’ said Koshiek Karan.

 There is no official reaction yet on the matter. 

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