Shoprite’s exit from Uganda had only been delayed on the hope that things could turn out for the better. However, a section of investors have been pushing for the closure of operations in markets considered to be a burden on the retail chain’s books.
Make no mistake, Shoprite’s exit from Uganda did not start yesterday, it has been a plan in the works for about eight or more years .
In 2013, Shoprite, one of Africa’s largest retail stores, had started interrogating some of its regional operations, including those in East Africa.
In East Africa, Shoprite was then operating stores in Uganda and Tanzania. Each of the two countries had three outlets spread in Dar el Salaam and Kampala, respectively.
The review subsequently resulted in the closure of operations in Tanzania in 2014 and a consideration for “a wait and see” gamble, in which Shoprite had hoped to improve its returns in Uganda assisted by prospects of assumed growth in the country’s middle class.
However, the wait, as already seen, could have resulted into more financial bleeding with the retail chain first slowing down amid increased market saturation, characterised by fast growth – in terms of retail outlets – against a static or slow-paced growth in the shopping culture.
Therefore, it would be right to say that Shoprite has since 2013 limped into each year with the hope of better returns yet some shareholders, although unsuccessful, had never given up on pushing for the closure of operations in markets that had appeared to burden its balance sheet such as Uganda.
In 2014, Shoprite made a painful decision to close its first store outside Kampala in Naaly, Wakiso District.
Perhaps, the closure could have been the first signal of a decision, which, while it has taken years, was about to come to the surface.
While it was too early to call, Thomas Okot, a retail market analyst then, had told Daily Monitor that whereas the outlet at Metroplex Mall in Naalya was a bet that had not paid off, its closure might have ignited a “plan to quit East Africa to consolidate its footing in other countries and back home [in South Africa]”.
The closure had come in the same year when Shoprite had closed its Mlimani City and Puga Road stores in Dar es Salaam and another in Arusha, which were subsequently sold to Nakumatt Holdings, which has since collapsed, for close to Shs30b.The closure, in Tanzania […]