Shoprite Nigeria to open neighbourhood stores as it retreats from mall-based expansion
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Shoprite Nigeria plans standalone neighbourhood stores instead of relying on large shopping malls, an investor in the business says, after dollar-denominated rents and naira depreciation pushed up occupancy costs.
Shoprite Nigeria is planning to open standalone neighbourhood stores as part of efforts to revive its retail operations, moving away from its traditional reliance on large shopping malls.
Adekunle Adebiyi, Executive Director for Investments at MBO Capital Management Limited, disclosed the plan during an interview on Nairametrics' Drinks and Mics, where he discussed the retailer's financial challenges, restructuring efforts and recovery plans. He said three Shoprite stores have reopened following a temporary shutdown that allowed the company to negotiate with suppliers and address its financial obligations.
Adebiyi said the strategy would let Shoprite concentrate on retail operations without committing substantial capital to property development. He revealed that approximately 17 of the retailer's 28 stores had dollar-denominated rental agreements at the time of the acquisition, and that the subsequent depreciation of the naira significantly increased rental obligations, adding pressure to operating costs.
According to him, rent should ordinarily account for about 8 per cent to 10 per cent of a supermarket's revenue, but some Shoprite locations carried substantially higher rental costs. He also acknowledged operational shortcomings, including weaknesses in inventory management and the loss of access to the former parent company's enterprise resource planning system, which required billions of naira to replace.
Ketron Investment Limited, a consortium led by Persianas Investment Limited, completed the acquisition of Shoprite Nigeria in June 2021 after the South African retailer decided to exit direct ownership of the Nigerian business. Bunmi Adeleye, Chief Strategy Officer at Retail Supermarkets Nigeria Limited, has said the company planned to reopen outlets at The Palms Shopping Mall and Circle Mall in Lagos while exploring smaller neighbourhood formats to reduce rental, electricity and diesel expenses. The company has not disclosed the number of planned neighbourhood outlets, their locations or an opening timeline.