In the competitive landscape of Nigeria's retail sector, Shoprite, once a dominant force, is grappling with significant operational challenges. Four years after its South African parent company divested its Nigerian operations to local investors, the retailer is witnessing a sharp decline in activity across its stores. Reports from various locations indicate sparse shelves, reduced customer traffic, and even permanent closures in some cities, raising questions about the brand's long-term viability in the country.
A Legacy Under Pressure
Shoprite first entered the Nigerian market in 2005, opening its inaugural store in Lagos and quickly expanding to become a staple in the retail supermarket industry. At its peak, the chain operated no fewer than 25 outlets across eight states, including the Federal Capital Territory. As a subsidiary of South African-based Shoprite Holdings, headquartered in Brackenfell, Cape Town, it revolutionized shopping habits by offering a wide array of products, from groceries to household essentials, often at competitive prices. This expansion not only created over 2,000 direct jobs but also bolstered local economies through partnerships with farmers and suppliers.
However, the retail giant has been battered by a confluence of economic factors. Supply chain disruptions, soaring inflation, and unfavorable market conditions prompted the original owners to shift focus back to their core South African operations. By 2021, Shoprite Holdings had sold its Nigerian arm to a consortium of local investors, transitioning from direct ownership to a franchise model. This move was part of a broader retreat from several African markets, including Kenya, Ghana, and Uganda, as the company sought to minimize capital exposure amid regional uncertainties.
Pieter Engelbrecht, the then-CEO of Shoprite Holdings, highlighted the rationale in 2020, stating that the sale was at an advanced stage and aimed at reducing costs while maintaining minimal investment in the region. Despite these intentions, the post-acquisition era has been marked by ongoing difficulties, with stores struggling to maintain stock levels and attract patrons.
Closures and Empty Aisles: A Nationwide Trend
Recent observations across Nigeria paint a concerning picture. In Kano, Shoprite shuttered its outlet in January 2024, citing financial strains and a challenging business environment. The store, located in Ado Bayero Mall, faced exorbitant rental costs—amounting to N66 million monthly or N792 million annually—exacerbated by additional expenses for electricity, generator maintenance, and staffing. Competition from local rivals along Zoo Road further eroded its market share. Following the closure, spaces were swiftly occupied by other retailers like Nine (N9ne) and Bedmate Furniture.
Umar Habu Ibrahim, Secretary of the National Association of Supermarkets in Kano, attributed the exit to broader issues such as fluctuating exchange rates, which inflated import costs, and strained relations with mall management. He noted that rent hikes and a lack of flexible policies for tenants contributed to the exodus of businesses. Even interventions by prominent figures, such as Deputy Senate President Senator Barau Jibrin, failed to reverse the decision.
Similar woes have afflicted outlets in other regions. In Ilorin, Kwara State, and Ibadan, Oyo State, Shoprite stores have been permanently closed. A visit to the Ilorin branch prior to its shutdown revealed a desolate scene: empty shelves filled with placeholders like bottled water packs, minimal bakery activity, and no recorded sales during observation periods. Staff attributed the downturn to the ownership transition, expressing hope for a revival under new investors but acknowledging the expected dip in patronage during such changes.
In Ibadan, both the Ring Road and Mokola branches were locked, with notices apologizing for temporary closures due to unforeseen circumstances. Management assured that efforts were underway to resume operations, though no specific timeline was provided. Shoppers continued to visit the malls, unaware or undeterred, but the shutdowns have left a void in local retail options.
Even in major hubs like Lagos and Abuja, the situation is dire. At the Ikeja City Mall outlet in Lagos, once characterized by bustling crowds and long checkout lines, shelves now stand bare across sections for groceries, frozen foods, and wines. A store administrator, Oluwatosin, explained that negotiations with suppliers under new management were causing the delays. She emphasized a strict policy against stocking expired goods and dismissed rumors of a full exit, noting recent television campaigns to reassure customers. However, staff expressed frustration over the prolonged issues, which have persisted for three to four months, with only sporadic small orders arriving.
In Abuja's Jabi Lake Mall store, power outages compounded the problems, leading to temporary closures. Upon reopening, customers encountered empty shelves, a condition staff said had lasted for two months. Anonymous employees voiced anxieties about job security, highlighting a lack of communication from management despite regular salary payments. One management official attributed the hiatus to a recent financial audit, promising restocking by the end of September and insisting that Shoprite's scale prevented an abrupt shutdown.
Broader Economic Context and Industry Exits
Shoprite's challenges are emblematic of wider economic pressures in Nigeria. Economist Dr. Marcel Okeke described the business climate as "unconducive," pointing to uncompetitive conditions compared to other economies. Factors like exchange rate volatility, high operational costs, and inflationary pressures have driven several multinational firms to scale back or exit entirely.
In recent years, companies such as GlaxoSmithKline (GSK) ceased direct operations in August 2023 after 51 years, shifting to third-party distribution. Procter & Gamble (P&G) followed suit in December 2023, resulting in over 5,000 job losses and a blow to foreign investment. Bolt Food halted services in December 2023, while Sanofi-Aventis transitioned to a distributor model by February 2024. Even in the energy sector, Equinor sold its Nigerian assets in December 2024 for $1.2 billion, concluding 31 years of presence.
These departures underscore the need for policy reforms to foster a more business-friendly environment. For Shoprite, while management remains optimistic about recovery through supplier renegotiations and post-audit restocking, the persistent empty shelves and closures suggest a precarious path ahead. Customers and employees alike await clearer signs of stabilization, as the retailer's fate could signal broader trends for foreign-backed businesses in Nigeria.