As Shoprite announces its probable withdrawal from Nigeria, Dianna Games examines the rise and fall of South African retail expansion across the continent and what it tells us about Africa’s wider investment climate
The retail sector in Africa has been one of the big success stories of the past decade, driven initially by a consumer boom in a handful of high-growth economies, demographics and a growing middle class. South African retailers and developers have ridden this wave, but in recent years some have encountered difficulties that reflect wider problems in the African investment environment.
The beginning of Africa’s consumer boom precipitated a round of growth in Western-style shopping malls, which were designed to offer a new experience to consumers used to small neighbourhood stores and the large open markets that characterise shopping in most of Africa. South African developers and retailers marched north to explore these markets as an alternative to the overcrowded and largely saturated market at home.
Shoprite, Africa’s biggest supermarket chain, was one of the first. Its first move outside South Africa and its immediate neighbours Lesotho, Swaziland, Namibia and Botswana had been to Zambia in 1995, where it opened a further 17 stores in less than a decade. It opened its first store in Nigeria in 2005 and by 2018 it had 25 stores across the country. Currently, it has operations in 13 African countries outside South Africa, although as the current edition of African Business went to press the company announced it was considering pulling out of Nigeria (see below).
Diversified department store Game, which was acquired in 1998 by Massmart (itself acquired by Walmart in 2011), is present in 12 countries. Another South African supermarket giant, Pick n Pay, has set up stores across southern Africa.
Low-cost clothing retailer Pep Stores set up in six African markets, including Nigeria, where it has outlets in 20 cities, while clothing and household retailers Mr Price and Truworths joined restaurant chains, mobile phone companies, hospitality groups, and many other South African companies investing in other African countries.
Private equity money lined up behind this popular commercial opportunity and facilities managers made the move to provide services to new developments in modernising cities. Property developers Atterbury, Hyprop, Attacq, Liberty Properties and others, snapped up shopping mall developments developed by UK-based Actis and others in Nigeria, Zambia and Ghana. Problems emerge
The South African engagement was generally positive – the companies brought jobs and […]