Giant retailer Shoprite plans to exit another African market

Giant retailer Shoprite plans to exit another African market

Africa’s largest retailer Shoprite Holdings on Tuesday said it plans to leave Kenya by closing or disposing of its remaining two stores in the year ahead, after only two years of operation in the East African country.

According to the retailer, the decision to leave is due to the economic impact of coronavirus (COVID-19) even as its Kenyan unit continues to underperform relative to the company’s return requirements.

In December 2018, Shoprite opened its first supermarket in Kenya at the Westgate Mall, Nairobi, with hopes of taking over Kenya’s grocery sector after the collapse of Uchumi Supermarkets and Nakumatt, two of the country’s top three retailers. However, the reverse seems to be the case as the company struggles to keep afloat and appears to be getting worse during the pandemic-induced economic crisis.

Before the pandemic, Shoprite had plans to open seven more stores, including six in Nairobi. But in April, it closed its Karen branch, shedding 104 jobs and engaging in a court battle with the billionaire owners of Waterfront Mall, its anchor tenant.

Later in August , the supermarket chain announced it would lay off 115 workers and close its second branch at City Mall in Nyali, Mombasa, citing reduced flow of shoppers as the primary cause. The South African retailer is now left with two stores in Nairobi at Garden City and Westgate malls, which it plans to close and exit the Kenyan market as a whole.

Shoprite’s decision to leave Kenya comes a month after the retailer revealed plans to reduce or sell all of its stake in its Nigerian subsidiary. The retailer has been reviewing its long-term options in Africa as currency devaluations, supply issues, and low consumer spending in Angola, Nigeria, and Zambia weigh on earnings.

Currently, Shoprite has over 2,300 stores across Africa and reported a 6.4 percent rise in sales for the year ended June 28. Like-for-like sales scaled up by 4.4 percent as customers spent more on groceries at its discount Usave and mid-to-upper end Checkers stores.

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