SHOPRITE TO OPEN NEIGHBOURHOOD STORES AS THREE OUTLETS RESUME OPERATIONS

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By: Muftau Fatimo

Shoprite Nigeria is planning to open standalone neighbourhood stores as part of efforts to revive its business following financial difficulties, with three outlets already reopened after a temporary shutdown.

Adekunle Adebiyi, Executive Director of Investments at MBO Capital Management Limited, an investor in Shoprite Nigeria, disclosed this during an interview on Nairametrics’ Drinks and Mics programme on Friday.

Adebiyi said the company temporarily shut down operations to negotiate with suppliers and resolve outstanding financial obligations before reopening three stores.

“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.

He added that the company would focus on opening smaller supermarkets in residential neighbourhoods rather than relying mainly on outlets in large shopping malls.

“We’re going to be opening standalone neighbourhood stores, which was always the plan,” Adebiyi stated.

According to him, the strategy would enable the retailer to concentrate its resources on supermarket operations instead of investing heavily in property development.

He explained that supermarkets typically lease their premises and invest in equipment such as shelves and refrigeration systems. However, this business model creates financing challenges in Nigeria, where banks often require physical assets as collateral before granting loans.

Adebiyi disclosed that MBO Capital struggled to secure bank financing during the acquisition of Shoprite Nigeria because lenders could not identify sufficient tangible assets to support the transaction.

Despite generating billions of naira in revenue, the retailer’s asset-light business structure made it difficult to access conventional bank loans, prompting investors to explore alternative financing arrangements.

Adebiyi identified foreign exchange volatility as another major factor behind Shoprite Nigeria’s financial difficulties.

He said about 17 of the company’s 28 stores had rental agreements denominated in dollars when the acquisition took place.

The depreciation of the naira subsequently increased rental expenses, placing additional pressure on the company’s finances.

According to him, rent should typically account for between eight and 10 per cent of a supermarket’s revenue, but some Shoprite outlets faced substantially higher rental costs.

He also cited weaknesses in inventory management and the loss of access to the enterprise resource planning system previously used by the former parent company as other operational challenges.

Adebiyi said replacing the system required billions of naira in additional investment, diverting funds that could have supported other areas of the business.

In June 2021, a consortium led by Persianas Investment Limited acquired Shoprite Nigeria after South African retailer Shoprite Holdings decided to exit direct ownership of its Nigerian operations.

The business subsequently continued under Retail Supermarkets Nigeria Limited through a franchise arrangement.

The retailer later faced rising operating costs and difficult trading conditions. In June 2024, Nairametrics reported the closure of its outlet at Novare Wuse Central Mall in Abuja.

In March 2026, Shoprite told Nairametrics that it was not leaving Nigeria but implementing a phased restructuring programme that began in August 2025.

Bunmi Adeleye, Chief Strategy Officer at Retail Supermarkets Nigeria Limited, had also announced plans to reopen outlets at The Palms Shopping Mall and Circle Mall in Lagos.

Adeleye said the company was exploring smaller neighbourhood stores to reduce expenses on rent, electricity and diesel.

However, Shoprite Nigeria has yet to announce the number of neighbourhood stores it plans to open, their locations or when the expansion will begin.