ShopRite, the South African grocery retailer has announced that it is leaving Nigeria after 15 years of business in Africa’s biggest economy.
The announcement by ShopRite came months after another South African brand, Mr Price, exited the market.
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 an 8.7% rise for the year.
The company said in a statement that it has been approached by potential investors willing to take over its Nigerian operations. It said it is considering an outright sale of its operation or selling a majority stake in its Nigerian subsidiary.
“As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation,” ShopRite said in a statement.
ShopRite-History
Shoprite Holdings Limited is a company that is popular across Africa for its fast-moving consumer goods (FMCG) operation. It operates more than 2,934 outlets in 15 countries across Africa and the Indian Ocean Islands. The company’s headquarters are in Brackenfell in the Western Cape province of South Africa.
The Shoprite Group of Companies started from small beginnings in 1979 with the purchase of a chain of 8 Cape-based supermarkets for R1 million. In 1983 the Group opened its first branch outside the Western Cape-in Hartswater in the Northern Cape in South Africa.
A year later Shoprite accelerated its growth by purchasing six food stores from Ackermans. In 1986, Shoprite was listed on the JSE Securities Exchange South Africa with a market capitalisation of R29 million.
ShopRite’s Entry into Nigeria
Superstores like Kingsway, Leventis, and UTC were the popular chain stores in Nigeria in the 1980s. However, one thing led to another and they either exited the country or liquidated.
However, ShopRite which opened its first store in Lagos in December 2005 brought a new lease of life to the grocery/superstore business in Nigeria.
Since opening its Lagos outlet, it has launched an additional 25 stores across eight states in the Federation including the Federal Capital Territory (FCT), Abuja.
ShopRite employs more than 2000 people, of which 99% are Nigerian citizens.
Additionally, Shoprite has built a relationship with over 300 leading Nigerian suppliers, small businesses, and farmers, securing a wide assortment of local brands.
Traditional Stores Vs Online Stores…Who is winning?
Apparently, this is another win for eCommerce and online stores, especially in Nigeria. The internet penetration in Nigeria currently stands at 46.6%. This share is projected to grow to 65.3 percent in 2025.
Although, Nigeria is not up there when it comes to internet penetration, there are a lot of Nigerians who are leveraging the internet to purchase items online on platforms like Konga and Jumia.
For an online store like ShopRite whose coffin was arguably nailed by the coronavirus lockdown, it should perhaps have boosted its online capabilities alongside the opening of stores across Nigeria.
Obviously, the online store are winning.
Possible Reasons Why ShopRite is Exit Nigeria
a.) Harsh Economic Environment
Of course, the economic environment in Nigeria is harsh. This was not helped at all by the coronavirus pandemic which grounded economic activities in the country.
b.) Strong competition from online and offline store
ShopRite has so many competitors trying to get a share of the market. From the online store to offline store, it has to contest with them for customers despite being one of the market leaders.
2 Comments
Pingback: Breaking: ShopRite Denies Reports That it is Leaving Nigeria
Pingback: Shoprite to exit Kenya by the end of 2020 - Innovation Village