On Monday, 12th of April, 2021, Africa largest retail giant, Shoprite announced that it’s considering discontinue its operations in Nigeria.
This has already been announced firstly by Shoprite holding limited in its operational and voluntary trading updates for the year ended, June 28, 2020.
Shoprite is the largest retail store in South Africa and operate in 15 countries in Africa. Shoprite Nigeria operates about 26 stores outlets across the country and employ about 2000 people who are 99% mainly Nigerians.
Shoprite exiting in Nigeria will simply means, it will sell its holdings to another investors who will continue manage and run the business.
Shoprite intention to exit from its Nigeria units appears to based on these factors.
5 reasons Shoprite is leaving Nigeria
Shopping is going online
Many retail stores has go online especially during the Covid-19 era. Jumia Nigeria explained its experience during the period; how the company is optimistic of higher revenue growth in the second quarter of Covid-19 in 2020.
So, internet service become faster and many Nigeria are now relied on online e-commerce store to meet their needs.
Covid-19 and Lockdown
In Nigeria 2020, the lockdown caused by Corona virus had an enormous impact on businesses which make the businesses affected to put resources in place to control the pandemic.
In this regards, Shoprite incurred a net total of R327,2 million spent across the area of health and safety, protective equipment, security, temperature scanner, store and distribution centre sanitizer.
In addition, for many several months in Nigeria, there were lockdown in the country. No opportunity for any business to operate including Shoprite. Moreover, sales was reduced by 1.4% in their market analysis.
Nigeria Naira Currency Fluctuation
The Nigeria naira fluctuation and multiple exchange rates have had a great effects on businesses and industries, especially for businesses that based on importations of goods.
Central banks of Nigeria has severally adjust naira in the past year which literally affect how Shoprite do their exchange of currency at the secondary market intervention sales[SMIS].
In the earlier march, the Nigeria naira was adjusted by the CBN to N360/$ from N307/$. On Tuesday, the dollar rate to naira was quoted at N380.69k at SMIS, where importers access the exchange for foreign currency.
Nigeria’s Limitation on Importation of Foreign Goods
This is another major problem Shoprite faces. Under the administration and era of Nigeria president, Muhammadu Buhari, limitations were made to importations of foreign goods, especially foods. It was made clear that Nigerians should focus on supporting their locally made goods, and this has negatively affect the number of importation of Shoprite products. This leads to low or no availability of products in Shoprite stores.
Shoprite said in its latest financial statement that the xenophobic attacks that happened in Nigeria in September, 2019 affect their business.
One public relations consultant to Shoprite in Nigeria, Mr Ini Achibong said, ”Shoprite has been willing for investor that will buy the company and nothing has changed in the Nigeria operation for now”