Shoprite to exit Kenya by year end

South African retailer Shoprite is set to fully exit the Kenyan market barely two years since it began local operations, citing under-performance of its supermarkets.

In its financials for the year ended June 28, 2020, Shoprite said it will close its two remaining outlets within the next 12 months. It has already shut its Nyali and Waterfront branches.

“In Kenya we will most likely be out of the market by the end of the calendar year meaning December, either by closing or disposing,” said Shoprite CEO Pieter Engelbrecht at a live cast presentation of the retailer’s results.

“Kenya, with three stores at year-end, has continued to under-perform relative to our return requirements. Post year-end, one store has been closed. Given the ensuing economic impact of Covid-19 and our experience to date, we expect to close or dispose of our remaining two stores in the region in the year ahead,” the financial statement read.

First store

Shoprite opened its first store in Kenya in December 2018. In 2019, the retailer opened three branches, two in Nairobi and one in Mombasa. The Waterfront outlet in Karen was the first to go down, followed by City Mall branch in Nyali, Mombasa. The two remaining outlets at the Westgate Mall and Garden City are headed he same way.

Shoprite was an anchor client at Karen’s Waterfront Mall and Nyali’s City Mall. The retailer posted a R28.2 million (Sh1.8 billion) for its business outside South Africa attributing part of the performance to losses in its Kenya operations.

“Supermarkets Non-RSA’s R28.2 million trading loss showed a marginal improvement on last year, however, was notably impacted by the loss in our Kenyan business, the negative impact of restrictions and store closures due to Covid-19 and a R106.2 million reduction in interest income earned on government bonds and bills,” said Shoprite.

Mass-market grocer

Shoprite, 17-per cent owned by retail tycoon Christo Wiese, has grown from eight supermarkets in 1979 to a no-frills mass-market grocer with operations in 15 African countries, including two stores in Uganda.

The retailer has discontinued operations in Nigeria. Shoprite stated that “following receipt of various approaches, and in line with our reconsideration of the group’s operating model in Nigeria, the board has initiated a formal process to consider the potential sale of a majority stake of, or its entire shareholding in, retail supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited.”

The Kenyan market has been unforgiving to retailers unable to get adequate foot traffic to sustain operations. Second largest local retailer Tuskys has been struggling with stocking its stores and boosting foot traffic but Naivas and Quickmart have been on an expansion drive.

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