Shoprite Nigeria plans to reopen and expand its operations through standalone neighbourhood stores following financial difficulties that forced the retailer to restructure its business.
Adekunle Adebiyi, Executive Director of Investments at MBO Capital Management Limited, disclosed the plan during an interview on Nairametrics’ Drinks and Mics on Friday. MBO Capital is an investor in Shoprite Nigeria.
Adebiyi said the company had reopened three outlets after temporarily shutting down operations. The shutdown allowed the business to negotiate with suppliers and address outstanding financial 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 said.
The retailer now plans to focus on smaller stores located within residential communities rather than relying mainly on large shopping malls. For more business developments, readers can also see RMAFC Seeks Chinese Investment.
Shoprite Targets Standalone Neighbourhood Stores
Adebiyi said standalone neighbourhood outlets formed part of the company’s original expansion strategy. The approach will allow Shoprite to serve customers without relying entirely on large retail spaces in shopping malls.
“We’re going to be opening standalone neighbourhood stores, which was always the plan,” he said.
The proposed model could also help the retailer reduce property-related expenses. Instead of investing heavily in shopping mall developments, Shoprite can concentrate its resources on supermarket operations.
Adebiyi explained that supermarkets typically lease their premises. Their major investments usually cover equipment such as shelves and refrigeration systems.
However, this arrangement can create financing difficulties in Nigeria. Banks often require physical assets as collateral before approving loans.
The investor said MBO Capital experienced such challenges while acquiring Shoprite Nigeria. Despite the retailer generating billions of naira in revenue, lenders struggled to identify sufficient tangible assets to support the transaction.
The investors consequently explored alternative funding arrangements. Similar financial pressures have affected businesses facing rising operating expenses, including those discussed in Petrol Price Rises in Abuja as Dangote Raises Gantry Rate to ₦1,350.
Foreign Exchange Pressure Affected Shoprite’s Costs
Adebiyi identified foreign exchange volatility as another major factor behind Shoprite Nigeria’s financial difficulties.
He said about 17 of the retailer’
