Shoprite to close shop

Shoprite store in Seapoint, Cape Town, South Africa on Wednesday, Dec. 21, 2016. Photographer: Dean Hutton/Bloomberg

Another retail store is reviewing its interests in East African market after Choppies quit the region.

Shoprite Holdings Ltd, Africa’s largest consumer goods retailer, is evaluating its operations in East Africa as part of a wider plan to exit markets that have proved to be unprofitable.

The South African-based retail giant which has operations in 14 African countries said in its 2019 annual report that several markets have been under performing including Mauritius, where it closed its operations last year due to continued non-profitability.

According to the Johannesburg Stock Exchange listed retailer, its operations outside South Africa only contribute 20 per cent of the firm’s profitability with a huge 80 per cent of the earnings coming from South Africa.

“Our focus is on ensuring reliable returns to preserve our investors’ capital, so that they regard us as a safe investment in Africa. Our next step is to optimise our existing investments,” said Pieter Engelbrecht, the firm’s chief executive.

“In 2019, the Group realised a trading loss in other African markets. The commodity price downturn has constrained economic growth, although our extensive store footprint and brand recognition positions us for strong longer-term performance.”

Shoprite exited Tanzania six years ago, by selling two of its branches in Dar es Salaam and one in Arusha to the then regional retailing giant Nakumatt Holdings at an estimated cost of $45 million.

And barely a fortnight ago, the retailer’s aggressive expansion in Kenya came to a sudden halt after the firm announced the closure of its Waterfront branch in Nairobi’s upmarket Karen suburb, rendering more than 100 workers redundant.

The retailer had already opened four stores in Kenya with plans to open seven more around the country, including six in Nairobi.

In a media statement the firm said it is currently reviewing its operations in the East African markets after exiting Tanzania and scaling down its expansion in Kenya by shutting down one of its four branches after it proved to be unprofitable.

“There is an ongoing evaluation and consideration in all of our business operations based on current and future performance,” the firm said.

“The Shoprite Waterfront Karen, situated in Nairobi will be closed following a few months of trading in a difficult economic climate. The position is unfortunately that it has become unviable to continue trading. It is unfortunate that we had no alternative but to terminate the employment of the valued employees that have helped to establish this store. The decision was not taken lightly,” the retailer said.