Shoprite Nigeria is planning to open standalone neighbourhood shops as a part of efforts to revive its retail operations, shifting away from its conventional reliance on giant buying malls.
Adekunle Adebiyi, Executive Director, Investments at MBO Capital Management Limited, disclosed this throughout an interview on Nairametrics’ Drinks and Mics, the place he mentioned the retailer’s monetary challenges, restructuring efforts and plans for restoration.
According to Adebiyi, three Shoprite shops have reopened following a short lived shutdown of operations to permit the corporate to negotiate with suppliers and tackle its monetary obligations.
- “We took a very, very drastic decision to just shut everything down whilst we negotiated with suppliers. Now three stores are back open,” he stated.
Shoprite plans standalone neighbourhood shops
He defined that the corporate intends to increase via smaller, standalone neighbourhood shops quite than relying totally on buying malls, a method he described as in step with its authentic marketing strategy.
- “We’re going to be opening standalone neighbourhood stores, which was always the plan,” Adebiyi stated.
He famous that the technique would permit Shoprite to consider retail operations with out committing substantial capital to property growth.
- Adebiyi defined that the standard grocery store mannequin depends on leasing appropriate industrial properties quite than buying buildings outright.
- He stated retailers might negotiate long-term leases, generally extending to 10 years, and make investments primarily in cabinets, refrigeration gear and different operational infrastructure.
- According to him, this method differs from the expectations of Nigerian banks, which usually favour companies with substantial mounted property that may function collateral.
- He disclosed that MBO Capital encountered difficulties securing financial institution financing in the course of the acquisition of Shoprite Nigeria as a result of lenders struggled to determine adequate tangible property towards which to present credit score.
Despite Shoprite producing billions of naira in income, its enterprise mannequin didn’t match standard asset-backed lending necessities.
Consequently, the traders turned to different funding preparations to full the acquisition.
Shoprite faces financing and foreign exchange challenges
Adebiyi additionally recognized international change volatility as a significant factor behind Shoprite Nigeria’s monetary difficulties.
He revealed that roughly 17 of the retailer’s 28 shops had dollar-denominated rental agreements on the time of the acquisition.
The subsequent depreciation of the naira considerably elevated rental obligations, inserting further strain on working prices.
According to him, lease ought to ordinarily account for about 8% to 10% of a grocery store’s income. However, some Shoprite places skilled considerably larger rental prices.
Beyond international change pressures, Adebiyi acknowledged operational shortcomings, together with weaknesses in stock administration and the lack of entry to the previous dad or mum firm’s enterprise useful resource planning system.
He stated changing the system required billions of naira in further funding, diverting funds that might in any other case have supported the enterprise.
What you must know
The proposed neighbourhood-store expansion represents the following section of that restoration technique, though the corporate has not disclosed the variety of deliberate shops, their places or a gap timeline.
As beforehand reported by Nairametrics, Ketron Investment Limited, a consortium led by Persianas Investment Limited, accomplished the acquisition of Shoprite Nigeria in June 2021, following the South African retailer’s determination to exit direct possession of the Nigerian enterprise.
- The transaction noticed Retail Supermarkets Nigeria Limited take over operations beneath a franchise association, with MBO Capital Management Limited among the many advisers concerned within the acquisition.
- In June 2024, Nairametrics reported that Shoprite announced the closure of its Wuse store at Novare Wuse Central Mall in Abuja, citing the prevailing enterprise local weather and the outlet’s monetary efficiency.
- The retailer’s challenges continued into 2025, with experiences of momentary retailer closures and operational disruptions linked to working capital constraints, electrical energy prices and different bills.
- However, in March 2026, Shoprite instructed Nairametrics that it was not exiting Nigeria however implementing a phased restructuring programme that started in August 2025.
Bunmi Adeleye, Chief Strategy Officer at Retail Supermarkets Nigeria Limited, disclosed plans to reopen shops at The Palms Shopping Mall and Circle Mall in Lagos whereas exploring smaller neighbourhood retailer codecs to cut back rental, electrical energy and diesel bills.
