Shoprite Nigeria is planning to open smaller standalone neighbourhood stores as part of its recovery strategy following financial difficulties that forced the supermarket chain to restructure its operations.
The plan was disclosed by Adekunle Adebiyi, Executive Director of Investments at MBO Capital Management Limited, an investor in Shoprite Nigeria, during an interview on Nairametrics’ Drinks and Mics programme on Friday.
Adebiyi said three Shoprite outlets had reopened after the company temporarily shut down 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.
The retailer intends to expand through smaller stores located in residential neighbourhoods, reducing its dependence on large shopping malls and potentially lowering operating expenses.
Shoprite Shifts Focus to Smaller Neighbourhood Stores
According to Adebiyi, the planned neighbourhood outlets form part of the company's strategy to concentrate resources on supermarket operations rather than investing heavily in large retail locations.
“We’re going to be opening standalone neighbourhood stores, which was always the plan,” he said.
The approach is expected to give Shoprite greater flexibility in choosing locations and managing expenses associated with rent, electricity, diesel and other operating costs.
Unlike large supermarkets situated in major shopping malls, smaller standalone outlets may require less space and lower upfront investment, depending on their location and design.
However, Shoprite has not yet announced how many neighbourhood stores it plans to establish, where they will be located or when the expansion will begin.
Why Shoprite Nigeria Faced Financial Challenges
Adebiyi identified several factors that contributed to the retailer's financial difficulties, including foreign exchange volatility, expensive rental agreements, financing constraints and operational challenges.
One of the major problems was the structure of the company's rental agreements.
According to the executive, approximately 17 of Shoprite Nigeria's 28 stores had rents denominated in US dollars when the acquisition took place.
The subsequent depreciation of the naira increased the cost of those leases, putting additional pressure on the company's operating expenses.
Adebiyi explained that rent would ordinarily account for about eight to 10 per cent of a supermarket's revenue, but some Shoprite locations faced considerably higher rental costs.
The situation made it more difficult for the business to maintain profitability amid Nigeria's challenging economic conditions.
Banks' Collateral Requirements Created Financing Difficulties
The executive also explained that Shoprite's business model created difficulties when investors sought conventional bank financing.
Supermarkets generally operate from leased premises, with much of their investment going into equipment such as shelves, refrigeration systems and other store infrastructure rather than ownership of the buildings they occupy.
Adebiyi said this structure posed a challenge in Nigeria, where banks often require tangible assets as collateral before granting substantial loans.
He disclosed that MBO Capital encountered financing difficulties during the acquisition of Shoprite Nigeria because lenders struggled to identify sufficient physical assets to support the transaction.
Despite the retailer generating billions of naira in revenue, its asset structure made conventional asset-backed financing difficult to secure, forcing investors to explore alternative funding arrangements.
Loss of Former Parent Company's Technology System Added Costs
Shoprite Nigeria also faced operational difficulties following changes associated with its ownership structure.
Adebiyi cited weaknesses in inventory management and the loss of access to the enterprise resource planning (ERP) system previously provided by the former parent company.
An ERP system helps businesses coordinate important operations, including inventory management, purchasing, sales and financial reporting.
According to Adebiyi, replacing the system required billions of naira in additional investment, diverting resources that could otherwise have supported the supermarket chain's recovery.
The combination of technology costs, foreign exchange pressures and high rental expenses added to the financial burden facing the business.
Shoprite's Ownership Changes in Nigeria
Shoprite Nigeria's current restructuring follows several years of changes in ownership and operations.
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 operating through Retail Supermarkets Nigeria Limited under a franchise arrangement.
The retailer later encountered further pressure from 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 was 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 exploring smaller neighbourhood store formats to reduce operating expenses.
What Shoprite's New Strategy Means for Nigerian Shoppers
The planned neighbourhood stores could change how Shoprite serves customers in Nigeria, particularly those living far from major shopping malls.
Smaller outlets located closer to residential areas could make grocery shopping more convenient and potentially reduce some of the expenses associated with operating large supermarkets.
For the company, the strategy offers an opportunity to reconsider its store formats, manage rental costs and direct investment towards core retail operations.
However, the success of the plan will depend on factors such as location selection, purchasing power, reliable supply chains, operating expenses and the company's ability to maintain a consistent customer experience.
Shoprite has yet to disclose the number of new neighbourhood outlets planned, their locations or a confirmed opening schedule.
For now, the reopening of three stores and the proposed expansion into neighbourhood retail represent key elements of the company's effort to stabilise its Nigerian operations and rebuild its business.
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