ShopRite, the largest retail store outlet in Africa, has stated that they may sell their ownership interests in the 26 stores they own in Nigeria. The supermarket juggernaut that owns or operates 2900 stores across the continent, has been in the country since 2005 and is a household name in Nigeria. This departure may have significant ripple effects in the commercial real estate sector in the region.
In a press statement, they mentioned that they are re-evaluating their operating model in Nigeria and that they are in talks with several Nigerian companies to take over the chain’s operations in the country. ShopRite is operated under Retail Supermarkets Nigeria Limited locally.
ShopRite employes over 2,000 employees in Nigeria and the vast majority are Nigerian citizens. They also have built solid relations and inroads within the country with suppliers, farmers, and local businesses and have been a vital part of several Nigerian states and cities.
Their modern approach to supermarkets, which include food courts, movie theatres, high-end stores, and arcades are a sharp contrast from traditional open air-markets that dominate the Nigerian retail real estate scene. Many imported goods are sold at their stores and a large chunk of their business comes from middle-class Nigerians.
In recent years ShopRite was a target of rioting and arson in response to the xenophobic attacks on Nigerians in South Africa, while this was not mentioned in their reasoning to leave the country, it was a still a smudge on their record. Other factors that may have contributed to their decision is the fierce competition from local Nigerian companies and the push and mandate to sell “Nigerian” products and support local companies. Online shopping is also gaining a footing in the country and is becoming more convenient and less hectic than supermarket places.
It remains to be seen what the short and long term effects of ShopRites exit will mean for the local economy in Nigeria, but we shouldn’t be surprised if the new ownership(s) will improve on the current business model.