South Africa’s retail giant Shoprite has indicated plans to shut down its loss-making Kenyan business by December this year. The retail chain is leaving Kenya’s fiercely competitive retail market, barely two years after setting up its first outlet.
Shoprite Holdings Limited has already closed down one of its outlets while still running two others.
“Kenya, with three stores at year-end, has continued to underperform relative to our return requirements. Post-year-end, one store has been closed,” said the firm in comments accompanying its financial results for the year ended 28th June, 2020.
Details from its latest financial statements indicate that the Kenyan business took out a loan of 238 Million rands ( KSh 1.5 Billion) from Stanbic Kenya, an unsecured loan, payable in 21 months and bearing an interest rate of 9.7%.
Shoprite opened its first outlet in Kenya in December 2018. It is among international firms that made entry into Kenya’s fiercely competitive supermarket business following the collapse of Nakumatt.
While local players led by Tuskys and Naiva have made attempts to find their footing following the exit of Nakumatt and Uchumi, an increasingly crowded field has made the going tough for any new player, Shoprite included.
The decision to exit Kenya comes a month after Shoprite said it was toying with the idea of closing camp in Nigeria by either reducing or selling off all of its stake in this subsidiary.
Shoprite supermarkets outside South Africa made a trading loss of 28.2 Million rands, impacted notably by losses in its Kenyan business.
Shoprite, with more than 2,300 stores across Africa, reported a 6.4% rise in sales for the year ended 28th June, 2020.
Despite significant COVID-19 lockdown restrictions impacting the retailer’s business in various markets in Africa, its South African subsidiary recorded increased sales by 8.7%.
Shoprite, while planning to leave the Kenyan retail scene, says it has also embarked on a process of selling either a majority stake or the entire shareholding in its Nigeria subsidiary.
In its report, Shoprite says it has been a difficult six months for its outlets out of South Africa.
This is due to lockdown regulations which impacted store openings, days and hours of trade, as well as severely restricting transport in some countries, impeding employees and customers ability to get to the stores.