Shoprite to Discontinue Operations in Nigeria

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Shoprite Shutting down
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The Shoprite Group of Companies is Africa’s largest food retailer. 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. Shoprite Holdings Limited is a public company listed on the Johannesburg Stock Exchange, with secondary listings on both the Namibian and Zambian Stock Exchanges. As of 2019, the Shoprite Group employed more than 147,000 people in more than 2,934 stores across 15 African countries with Shoprite Nigeria accounting for over 2000 employees and 26 stores respectively.
The company opened its first Nigerian store in the Victoria Island area of Lagos in December 2005. Having expanded to other regions in Nigeria, The Board of Africa’s biggest retailer, Shoprite Holdings Limited, has announced plans to discontinue operations in Nigeria after 15 years.

The largest Africa food retail group, which announced a 6.4 per cent increase (R156.9billion) in total sales of merchandise for the outgoing year despite the challenges posed by the COVID-19 pandemic, announced that it took the decision to discontinue its Nigeria operation “following approaches from various potential investors, and in line with our re-evaluation of the group’s operating model in Nigeria.” This was disclosed in the company’s operational and voluntary trading update that was published Monday morning, 3rd August, 2020.

“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.

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What could this mean?

Despite being regarded as one of the biggest operators in the business world especially in Africa, it couldn’t stop the negative impact of the coronavirus pandemic hitting hard. The Shoprite needs physical footsteps to generate the required revenue, and with the persistent threat from coronavirus pandemic still increasing by the day, it will only get worse for businesses to thrive.

Over 2000 more people will be relieved off their jobs facing the streets once again.

On the long-run, this could be an advantage for other smaller retail stores to gain the market share left behind by shoprite.

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