Shoprite set to open neighbourhood stores after shutdown

Shoprite Nigeria intends to establish standalone neighbourhood stores to revitalise its operations, following financial difficulties that led to a business restructuring. Adekunle Adebiyi, Executive Director, Investments at MBO Capital Management Limited, an investor in Shoprite Nigeria, revealed this during an interview with Nairametrics’ Drinks and Mics.

Three stores had already reopened after the company temporarily closed its operations to negotiate with suppliers and resolve outstanding financial matters. The company plans to expand through smaller standalone outlets in residential areas instead of large shopping malls. This approach is designed to concentrate resources on supermarket operations rather than investing heavily in property development.

However, the company faces financing challenges, as banks typically require tangible assets as collateral, which is difficult to secure in Nigeria. Additional pressures include foreign exchange volatility, with 17 of the retailer’s 28 stores having rental agreements denominated in dollars when acquired. The depreciation of the naira increased these lease costs, raising operating expenses.

Operational issues, such as weaknesses in inventory management and the loss of access to the former parent company's ERP system, required billions in additional investment to resolve. The recovery efforts come after a series of operational challenges and changes in ownership, including the acquisition by a consortium led by Persianas Investment Limited in June 2021 after Shoprite Holdings exited direct ownership of its Nigerian operations.