Africa’s retail giant, Shoprite Holdings Group, has announced that it will exit the Nigerian market, according to a statement from the group.
“Following approaches from various potential investors, and in line with our re-evaluation of the Group’s operating model in Nigeria, 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”, read a statement from the group issued by Pangaea Securities on 3rd August from Cape Town South Africa. “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”.
Shoprite is not the only South African retailer to exit the Nigerian market. “Shoprite is the latest South African retailer to look at leaving Nigeria – clothing firm Mr Price announced its exit in June, and Woolworths in 2014”, according to article published by the BBC on 3rd August 2020.
The Nigerian macro environment has come under siege following the plummeting of its main forex earner, oil, falling prices and the COVID-19 pandemic. This has led to accelerating inflation that has made life for the retailer very difficult. “The collapse in oil prices coupled with the COVID-19 pandemic is expected to plunge the Nigerian economy into a severe economic recession, the worst since the 1980s, according to the latest World Bank Nigeria Development Update (NDU)”, according to the World Bank in a article published on 25 June 2020.
However, a struggling economy were not the only woes faced by the retailer. Anti South African business sentiment has been on the increase of late. “The National Association of Nigerian Students (Nans) – which represents university students at campuses across the country – picketed branches of Shoprite and South African telecoms giant MTN, turning away staff and customers”, according to the BBC report.
Despite difficult circumstances facing the retailer in Nigeria, in a year incorporating the COVID-19 lockdown and accompanying regulations governing trade, transport and operations, the Group increased total sale of merchandise for the 52 weeks to 28 June 2020 (including the impact of hyperinflation in the prior year) by 6.4% to approximately R156.9 billion. Like-for-like growth for the year was 4.4%, according to the SENS announcement published on 3rd August 2020.
The Group’s core business, Supermarkets RSA (including liquor), contributing 78.0% to Group sales, achieved sales growth of 8.7% for the year, according to the SENS statement. Like-for-like growth for the year measured 6.8% Supermarkets Non-RSA (excluding Nigeria) contributing 11.6% to Group sales, recorded a decline in sales of 1.4% for the year.