Shoprite unveils new expansion plan after shutting down stores

Shoprite Nigeria is preparing to expand through smaller neighbourhood supermarkets as the retailer works to rebuild its business after financial difficulties forced it to suspend operations at several locations and renegotiate obligations to suppliers.

The planned expansion represents a shift away from the large shopping mall outlets that defined the supermarket chain’s presence in Nigeria, with the company looking to establish stores closer to residential communities.

Adekunle Adebiyi, executive director of investments at MBO Capital Management Limited, an investor in Shoprite Nigeria, disclosed the plan during an interview on Nairametrics’ Drinks and Mics programme.

Adebiyi said three Shoprite stores had reopened after the company took the decision to shut down operations temporarily while negotiating with suppliers and addressing 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 added that the company intended to establish standalone neighbourhood supermarkets as part of its recovery strategy. However, the retailer has yet to announce how many outlets would be opened or where they would be located.

The restructuring follows years of financial and operational challenges that weakened the retailer’s ability to sustain its previous business model.

Adebiyi identified foreign exchange volatility and expensive rental agreements as major factors behind the difficulties. According to him, 17 of the 28 stores operated by the business at the time of its acquisition had rents denominated in US dollars.

The depreciation of the naira subsequently increased the cost of those leases, putting additional pressure on the company’s finances.

Adebiyi said rent should ordinarily account for between eight and 10 per cent of a supermarket’s revenue, but some Shoprite outlets faced significantly higher costs.

The company also encountered problems with inventory management and the loss of access to the enterprise resource planning system used by its former parent company. Replacing the system required billions of naira in additional investment, according to Adebiyi.

The proposed neighbourhood format is expected to reduce the financial burden associated with operating large outlets inside shopping malls.

Rather than committing substantial capital to property development, the retailer plans to concentrate on supermarket operations, using leased premises and investing in equipment such as shelving and refrigeration systems.

Adebiyi said this asset-light model had also created difficulties in securing conventional bank financing because lenders often require tangible assets as collateral.

MBO Capital encountered such challenges while arranging financing for the acquisition of Shoprite Nigeria, despite the business generating billions of naira in revenue.

Shoprite’s current recovery efforts follow a change in ownership in 2021, when a consortium led by Persianas Investment Limited acquired its Nigerian operations after South African retailer Shoprite Holdings decided to exit direct ownership of the business.

The Nigerian operation continued under Retail Supermarkets Nigeria Limited through a franchise arrangement.

The business subsequently faced mounting operating costs and difficult trading conditions, leading to the closure of several outlets in different parts of the country.

In September 2025, the company announced a business model reset aimed at making its operations more sustainable. By March 2026, it had reaffirmed that it was restructuring rather than leaving Nigeria, while identifying plans to reopen stores at The Palms Shopping Mall in Oniru and Circle Mall in Jakande, Lagos.

The move towards smaller neighbourhood outlets forms part of that broader turnaround effort, as the retailer seeks to reduce expenses associated with rent, electricity and diesel.