South African retail giant Shoprite shuts second outlet in Kenya

KENYA – Africa’s largest food retailer, Shoprite Holdings has announced that it will be closing its outlet at the City Mall in Nyali, Mombasa, citing the business as no longer viable on the reduced flow of shoppers.

This comes four months after it shut down its Waterfront, Karen outlet in Nairobi rendering 104 workers redundant.

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With the new closure, 115 workers will be laid off and the retailer has revealed that it has already notified the Kenya Union of Commercial Food and Allied Workers (KUCFAW) of the impending layoffs and invited the lobby for a consultative meeting.

“Endeavours to continue trading at the Nyali branch is no longer viable,” said the retailer in the notice to the union signed by Human Resources Manager Carolyne Walubengo.

There are currently 115 people employed at the Nyali branch, of which 92 are members of KUCFAW. “It is contemplated that the intended date of termination on account of redundancy will be August 31, 2020.”

“It should be noted that the branch will cease trading operations on a sooner date, but this will not prejudice employees as they will continue to tender the services at the said branch until the termination date,” added Walubengo.

The retail chain, which has a presence in 15 African countries, opened its first store in Kenya in 2018, aiming to take advantage of the gaps in Kenya’s retail sector after the collapse of top supermarkets, including Uchumi and Nakumatt. 

The closure of the stores in will put a dent in Shoprite’s expansion plans in Kenya, where it has remained with two branches and had targeted opening seven stores, including six in Nairobi.

Its reduced branch count comes amid increased competition from cash-rich retailers such as Naivas and Carrefour in a sector where local retailers like Tuskys are struggling with lower sales and mounting debts.

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The coronavirus pandemic, among other factors, have worsened retailers’ woes and heavily reduced footfall.

Not only in Kenya, the retailer is also retreating from countries outside its home-ground in South Africa i.e in Kenya, Angola, Nigeria and Zambia.

In its recently released trading update, it announced that it is considering the sale of all of or a majority stake in its Nigerian subsidiary, Retail Supermarkets Nigeria Limited after reviewing its operating model and receiving approaches from various investors.

This is coming about 15 years after it opened its first store in Lagos in December 2005. Shoprite has over 25 stores across the country.

Nigeria’s huge market potential has been damaged by currency devaluations, weakening oil prices and challenges from earnings in local currency but supplies paid in dollars.

In 2019, the retailer faced lower consumer demand in Nigeria as locals boycotted SA brands to protest against xenophobic violence in SA.

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