The fortune of Africa’s largest retail outlet is going downhill as a dream of becoming Africa’s Walmart is coming to an end with closure of shops across other countries in Africa. Shoprite has announced plans that it is leaving Uganda and Madagascar where it set up shops in 2000 and 2002 respectively. Shoprite launched in Uganda in 2000, where it has five stores. It entered the Madagascan market in 2002 and operates 10 stores across the island.
Africa’s largest retailer, Shoprite Holdings, has announced plans to discontinue operations in Uganda and Madagascar, adding to its growing list of African departures.
In a statement yesterday, the company disclosed the news of its exit after announcing an 8.1 per cent increase in total merchandise sales from continuing operations to R168 billion for the 53 weeks ended July 2021. The retailer, which currently operates 10 stores in Madagascar and five stores in Uganda, also forecast a 25.3% rise in annual basic headline earnings per share from continuing operations.
“In line with the group’s non-RSA review process, our operations in Madagascar and Uganda have been classified as discontinued,” said Shoprite.
Shoprite has been reviewing its long-term ventures across Africa over the past year as currency devaluations, lower commodity prices and high inflation have impacted disposable household incomes negatively.
The South African retail giant is now adding Uganda and Madagascar to its exits after selling its Nigerian business of 15 years and closing its Kenyan stores two years after entering the market.
Commenting on the exit, Peter Hirst, senior analyst at Euromonitor International, told IOL that the exit comes as footfall has decreased significantly in Shoprite outlets, with many Ugandans opting to ”buy local” in 2020, resulting in under-performance in the five outlets across the country.
“This trend benefited traditional grocery retailers, which boast lower average unit prices, providing relief to a struggling consumer base,” Hirst said.
He added that the rise of online shopping, which drove shoppers away from traditional brick-and-mortar outlets like Shoprite, and the significant costs incurred by the company to adhere to the Covid-19 pandemic might have been the final nail in the coffin.