Retail giant faces supplier negotiations and financial pressures four years after ownership change
Lagos, Nigeria – Shoprite outlets across Nigeria are either closing their doors for good or struggling with what can only be described as severe stock shortages. Stores in Ibadan and Ilorin have shut down completely, while the remaining locations in Lagos and Abuja? Well, they’re operating with shelves that look more empty than full.
Closures Hit Multiple States as Supply Issues Mount
Walk into the Ikeja City Mall location in Lagos these days and you’ll notice something’s off. This used to be the place where you’d wait in long lines just to check out, where aisles were packed with shoppers hunting for everything from groceries to wine. Now? It’s eerily quiet.
The shelves across groceries, frozen foods, and wine sections appear mostly bare during recent visits. What products remain seem scattered, almost like someone’s trying to make a little inventory stretch as far as possible.
“Actually, there is a new management, so they are trying to have a kind of meeting with all the stakeholders, the suppliers and vendors so that they can renegotiate their prices,” explained Oluwatosin, the store administrator at the Ikeja branch. “Hopefully when that is completed, then they will start stocking the store again.”
But staff at the Jabi Lake Mall in Abuja tell a similar story, one that suggests this may be more than just routine negotiations. “This is what has been happening in the last two months. We have been ordering and there is no supply and we don’t know what is happening,” said one employee who asked not to be named.
Meanwhile, Shoprite stores in Ilorin, Kwara State and Ibadan, Oyo State have already called it quits. The Kano closure back in January 2024 might have been a warning sign, that store was hemorrhaging money with monthly rent of ₦66 million to Ado Bayero Mall. That’s nearly ₦800 million a year before you even factor in electricity, generator costs, and staff salaries.
From South African Success Story to Local Ownership Struggles
Here’s where things get interesting. Shoprite didn’t start out as a struggling business in Nigeria. When it first opened in Lagos back in 2005, it was something of a retail revolution, a South African success story that quickly became the go-to supermarket for many Nigerians across eight states.
But the South African parent company, Shoprite Holdings, decided to cut its losses in 2020. After 16 years of what seemed like steady growth, they sold to local investors. Then-CEO Pieter Engelbrecht was pretty blunt about why: “unfavourable market conditions.”
“We are at the approval stage in terms of the sale of our Nigeria supermarket operation. From here, our capital allocated to the region remains at a minimum and we continue to manage costs as best as we can,” he said at the time.
What followed appears to be a textbook case of how ownership transitions can go wrong. The new local management took over just as Nigeria was grappling with supply chain headaches, a volatile currency, and increased competition from both traditional shopping malls and online platforms that were expanding aggressively.
Staff Caught in the Middle, Management Promises Better Days
You have to feel for the employees caught up in all this. “Everybody here, our chest is beating because we can’t afford to lose our jobs if they close,” one Abuja-based staff member told us. That’s not exactly the kind of job security anyone wants.
Interestingly, management is still paying salaries regularly, though the reason might be more practical than generous. “We are paid regularly because the management knows if they don’t pay, staff will pack the items in the store and go with them,” one employee noted with what sounded like dark humor.
A management representative in Abuja tried to sound optimistic about restocking plans: “The company just finished auditing its annual financial results and wanted to certify the state of things first before continuing with supply. So by God’s grace at the end of September we will restock.”
Whether that timeline proves realistic remains to be seen. The same official dismissed closure rumors, emphasizing that “Shoprite is not a one man supermarket and it can’t just close like that.”
Part of a Bigger Exodus?
Shoprite’s troubles may reflect something larger happening in Nigeria’s economy. Since 2023, we’ve seen a parade of international companies either scaling back or leaving entirely.
GlaxoSmithKline pulled out in August 2023 after half a century in the country. Procter & Gamble followed suit in December, taking over 5,000 jobs with them. Bolt Food shut down its Nigerian operations the same month, while Sanofi-Aventis decided to switch to third-party distribution rather than maintain direct operations.
Most recently, Norwegian energy giant Equinor wrapped up a $1.2 billion asset sale and exited after 31 years in Nigeria’s oil sector.
What’s Really Going On Here?
Dr. Marcel Okeke, an economist, doesn’t mince words about Nigeria’s business environment. “Of course many companies have left and many are still going to leave because the environment is not conducive. Nigeria’s economy as it is uncompetitive when you compare it to other economies, those economies are more business friendly.”
For retailers specifically, the challenges seem particularly acute. Foreign exchange instability makes it expensive to import goods. Infrastructure problems drive up operational costs. Regulatory uncertainty creates headaches for long-term planning.
Shoprite’s case appears to be a perfect storm: high commercial real estate costs (remember that ₦66 million monthly rent in Kano?), currency volatility affecting imported inventory, and fierce competition from both local and international players.
Some industry watchers suggest we might see more multinational retailers reconsidering their Nigerian operations in the coming months. But predicting who stays and who goes isn’t easy, business decisions like these often depend on factors that aren’t immediately visible to outside observers.
Whether Shoprite can turn things around by the end of September, as management promises, or whether this is the beginning of the end for what was once Nigeria’s flagship foreign retailer, remains an open question.
Daily Trust
