Three Supermarket Giants That Shutdown During COVID-19 Period in Nigeria
- Supermarkets are leaving Nigeria gradually, and returning to the country of their parent company, after years of operation in Africa's largest economy
- Majority of the Supermarkets leaving are South African-owned, and have been operating for more than five years within the country, investing millions
- Double-digit inflation, border closure, inability to take out their money have been some of the challenges faced by the Supermarkets in Nigeria
Spread of supermarket chain across Nigeria have made shopping easy for Nigerians. Adeola Ismail Chukwuma (not real name) no longer have to roam several markets to get food items on their grocery list.
These superstores, ranging from Hubmart, Ebeano, Shoprite, Mr. Price, The Game, amongst many others, offer the likes of Chukwuma different promises to compete for the largest share of the Nigerian consumer market.
As consumers purchasing pattern changed, Nigeria became one of the top ten most attractive investment market for retailers in Africa, sitting comfortably at eight, while occupying the twenty-seventh in the global market as of 2018 according to NIPC.
Source: Getty Images
Costly promise coming back to hurt in an era of double-digit inflation
These promises hovers around 'lower prices' that consumer market can't find elsewhere. However, this market incentives seem to have come back to bite them as consumer demand increases, alongside inflation, not many of these Superstores can keep to their call to action.
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When they entered Nigeria's retail market, inflation was single-digit, but years later, border, tariff, importation ban has driven inflation to double-digit, and its hurting their ability to stay profitable, and threatens their survival in a business environment described as hostile by some entrepreneurs.
This is why some retail giants have been disappearing from the market, and their exit have been accelerated by the COVID-19 pandemic which disrupted their ability to generate revenue.
Between 2020 and 2021, two supermarkets have already exited the Nigerian market, while one is negotiating its exit with potential investors interested in acquiring its asset.
Three supermarkets exit Nigeria
One thing these demised Supermarkets have in common is their root - South Africa. While other retailers are weathering the storm in Nigeria, the SA superstores are calling it quit and relocating to their parent home.
Mr. Price
In June 2021, the clothing company announced that it has closed four of its stores it's in Nigeria, nine years after entering the country to cash in on Africa's largest economy.
Mr, Price cited importation disruption and its inability to move funds out of Nigeria as reason for downing tools, with plan to focus on its home country stores.
Shoprite
After 15-years of operation in Nigeria, Shoprite disclosed that it was going to discontinue its subsidiaries within the country - also during the COVID-19 year.
Retail Supermarkets Nigeria Limited, the subsidiary of Shoprite South Africa, stated that it was struggling with sales across its 25 stores, adding that it will sell off the retail asset by end of 2020.
Although the acquisition didn't materialise until the end of the second quarter 2021, when Persianas bought 100% controlling stake, to ease Shoprite's exit out of Nigeria.
Game
The Game also joined its South African counterparts to exit Nigeria, as the company decided to review its business operation, and cut off losses, to focus investment on parent company.
Game, owned by Massmart, announced in last week of August 2021, that it intends to close five of its stores in Nigeria, and it is already looking for potential buyers.
It said the five stores are part of the 14 stores across Ghana, Uganda, and Kenya, that will be shutdown to protect investment as sales from the rest of Africa - for businesses outside its SA home - declined.
Reason for their shutdown
The three companies reason for exiting Nigeria are linked to inflation, high import duties, and currency volatility, all of which are said to be drowning capital investment.
The Chief Executive Officer of Mr. Price, Mark Blair, was quoted as saying last year;
"Quite frankly I’m not prepared to invest any further whether it’s an investment in time or in money into a country that is volatile as it is."
Aside from the double digit inflation rate influenced by the sudden border closure in 2019, Shoprite cited the impact of COVID-19 on its sales, as movement of restriction, salary cut dropped purchasing power of Nigerians.
While Massmart's chief executive, Mitchell Slape, said during the group's virtual financial results presentation that;
"We have reached the conclusion that the performance and complexity in running the 14 stores in five markets in the East and West Africa is something frankly that we needed to address," said Mr Slape during the group's virtual financial results presentation on Friday.
Five Businesses That Benefited from COVID-19 Outbreak, and Amount They Made
While COVID-19 affected the operation of Nigerian Supermarkets, there were four types of businesses that benefited from the pandemic that disrupted global trade.
Drug companies, dispatchers, streaming corporation amongst others were the biggest gainers during the lockdown that lasted for more than four months.
Companies like Moderna, Pfizer, MTN and many more generated billions of revenue due to COVID-19 outbreak that forced millions of people to use their products.
Source: Legit.ng
