By Suliah Lawal
Shoprite Nigeria is preparing to expand its operations through smaller neighbourhood stores following a period of financial difficulties and restructuring that led to the temporary closure of its outlets.
Adekunle Adebiyi, Executive Director of Investments at MBO Capital Management Limited, an investor in the supermarket business, disclosed the development during an interview on Nairametrics’ Drinks and Mics programme on Friday.
Adebiyi said the company had reopened three stores after temporarily suspending operations 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.
He explained that the retailer intended to move towards standalone neighbourhood outlets rather than depend largely on supermarkets located within major shopping malls.
“We’re going to be opening standalone neighbourhood stores, which was always the plan,” Adebiyi stated.
The proposed strategy is expected to help the company reduce property-related expenditure and concentrate its investment on core supermarket operations.
Adebiyi explained that supermarkets generally operate from leased premises, with capital investments directed towards operational equipment, including shelving and refrigeration systems.
However, he noted that this arrangement could make it difficult for businesses to secure conventional bank financing in Nigeria, where lenders often require physical assets as collateral.
According to him, MBO Capital encountered difficulties obtaining bank loans during the acquisition of Shoprite Nigeria because the company’s business structure did not provide sufficient tangible assets to satisfy lenders’ requirements.
He said the challenge persisted despite the retailer generating billions of naira in revenue, forcing investors to consider alternative financing options.
The executive also identified exchange-rate volatility as a major factor contributing to Shoprite Nigeria’s financial difficulties.
He disclosed that approximately 17 of the company’s 28 stores had rental agreements denominated in US dollars when the acquisition took place.
The subsequent depreciation of the naira increased the cost of servicing those leases, putting additional pressure on the retailer’s operating expenses.
Adebiyi explained that rent should ordinarily account for between eight and 10 per cent of a supermarket’s revenue. However, some of the company’s locations faced considerably higher rental costs.
The business also experienced operational difficulties, including weaknesses in inventory management and the loss of access to the enterprise resource planning system previously provided by its former parent company.
According to Adebiyi, replacing the system required an additional investment running into billions of naira, diverting resources that could otherwise have supported the company’s recovery.
Shoprite Nigeria’s current recovery efforts follow several years of operational challenges and changes in ownership.
In June 2021, a consortium led by Persianas Investment Limited completed the acquisition of 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 mounting pressure from rising operating expenses and challenging 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 withdrawing from Nigeria but implementing a phased restructuring programme that began in August 2025.
Bunmi Adeleye, Chief Strategy Officer at Retail Supermarkets Nigeria Limited, had also disclosed plans to reopen outlets at The Palms Shopping Mall and Circle Mall in Lagos while considering smaller neighbourhood stores as a way to reduce expenses associated with rent, electricity and diesel.
Although the company has confirmed plans to develop its neighbourhood store format, it has not disclosed how many new outlets it intends to establish, the locations being considered or when the expansion will begin.
The proposed strategy could give Shoprite greater flexibility in choosing locations and managing operating costs as it works to strengthen its position in Nigeria’s competitive retail market.
