On Monday, August 3, 2020, news broke that South African retailer, Shoprite International Limited, is considering exiting from its Nigerian operations and the public panicked but the group said there was no need to worry.
Following the news, some Nigerians took to social media to express their concerns on the impact of the decision on the livelihood and shopping convenience of citizens who depend on the retail outlets.
The Nigerian division – Retail Supermarket Nigeria Limited – has outlets across the country where brands, both Nigerian and foreign, are stocked with thousands of Nigerians employed.
Shoprite, which has spent 15 years in Nigeria, stated that customer visits for the year declined by 7.4 per cent due to the COVID-19 pandemic.
It also noted that outside South Africa, sales only increased by 0.1 per cent, and an overall decline in sales of 1.4 per cent for the year.
“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.
“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,” the update read in part.
Shoprite joins two other South African retailers, Mr. Price and Woolworths, who have also announced exists from Nigeria due to a harsh operating environment.
The South African retailer has been struggling in Nigeria in recent years owing largely to increased competition and government policies such as border closures and local production of consumables.
Many Nigerians pointed out the imminent loss of jobs from the divestment as Shoprite is a leading employer of labour in the country.
Twitter user, Oyindamola @dammiedammie35 said, “So Shoprite is leaving Nigeria, thousands of people will be without jobs now.
“Some other thousands are depending on those people’s incomes. My new neighbor works with Shoprite in Ibadan and he has three kids.
“His wife is a private school teacher and hasn’t worked in a while. There are so many people like that,” he said.
Experts posit that the future for Shoprite and its employees might now depend on the ability of its South African parent company to find buyers and the buoyancy of the buyers.
Meanwhile, shoppers have lamented the eventual loss of shopping convenience that might happen if the outlets are closed down.
Journalist, Molara Wood, while reacting to the news on Twitter, said, “One of the few places where you are likely to get 99 per cent of the items on your grocery list without having to hop to two or three different places.
“And have you seen the sheer number of Nigerians employed in each store? The massive job losses.
“We forget that these are about human beings. Real, everyday people. Real everyday suffering,” she added.
Tayo Okuboyejo raised the issue of local suppliers likely to suffer from the stores closing and said, “There is the matter of their local suppliers who most likely will also be put out of business. This is crazy.”
Meaning for the Nigerian market
Some commentators have argued that the news of Shoprite’s exit indicates that the Nigerian market size is shrinking and there is a gradual loss of the consumer class.
Entrepreneur, Jason Njoku, on Twitter, wrote, “ShopriteSA contributed 78 per cent of sales; saw 8.7 per cent rise.
“When I tried to explain the collapse and hollowing out of a consumer class folks called me unpatriotic. Nigerians always seem to overvalue the Nigeria market,” he said.
Meanwhile, human rights lawyer, Ayo Sogunro, said, “In South Africa and Nigeria, Shoprite caters to a lower middle class population.
“This means Nigeria’s lower middle class population has reduced so much that even they can no longer cover Shoprite’s cost of doing business,” he added.
On his part, Olumi Akin said, “The business environment is really very complex and hostile.
“From logistics (transporting goods to all stores nationwide), to electricity (lack of it), and the unpredictable and ever changing administrative red tape. Hence, the size of our consumer class wouldn’t mean much here,” he said.
However, some pundits believe that the move would create more avenue for growth for Nigerian businesses.
Lojo Damojo said, “With the emergence of new players like Hubmart, SPAR, GrandSquare, etc. It is only natural for market share to reduce.”
Ayo Bankole added, “The Board of Africa’s biggest retailer, Shoprite, has announced plans to discontinue operations in Nigeria after 15 years in.
“While this may open up opportunities for local investors in that sector, it is a bad pointer to what Nigeria has become as an investment destination.”
Meanwhile, in a recent interview with Vanguard, the business group debunked news that the retail store was closing up in Nigeria.
The Country Director for Chastex Consult, Ini Archibong, in a telephone conversation, said: “Shoprite is not leaving Nigeria.
“We have only just opened to Nigerian investors which we have also been talking to just before now. We are not leaving, who leaves over a 30 billion dollar investment and close shop? It doesn’t sound right.
“We only gave this opportunity to Nigeria investors to come in and also help drive our expansion plan in Nigeria. So we are not leaving.
“I have tried to say this to many people as I can. There should be no panic at all and all of that. There is no truth in that report,” he added.