Shoprite announces shutdown, ready to pull out of Nigeria
Shoprite announces plan to pull out of Nigeria
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.
It is also an indicator to how poorer Nigerians have become, as grocery retail is a direct beneficiary of a prosperous citizenry. A continuing exit of large retailers simply mean one thing – disposable income is reducing. Govt needs to fix poverty level and stop virtue signaling.
Again, I have always said most investors overestimate the Nigerian market. Even most analysis on Shoprite exit are emphasizing on Nigeria being the most populous African country. We often forget that over 70% of us live in poverty. And only Lagos holds a real economic promise.
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%.
This comes just weeks after it was revealed that another popular retail store, Mr. Price Group, is making plans to close its Nigerian business to focus on its home market business in South Africa.