As the world witnesses the transition of one of the most iconic brands of the last century into a pharmaceutical company, Nigerians woke up this week to the most shocking news of all in the retail sector. In the early wake of the week, news filtered in that South Africa’s biggest household item retailer in the country is leaving.
Most Nigerians took the news with shock and utter surprise as Shoprite announces it eminent exit from the country after about 15 years of doing business. Shoprite according to news sources suffered a major financial setback in the wake of the global pandemic especially in the country. As stated before, this pandemic is a major leveler not just of lives but also of businesses.
The global pandemic aside, of recent, South African businesses have had to exit the country one after the other. A couple of years ago, Mr. Price and Woolworth both major retailer of cloth items left the country after back to back losses in the country. I believe this begs for a closer look given the fact that most of these brands come into the country and exit within the shortest time frame.
The root of the repeat exit of these businesses cannot be disconnected from the consumption habits of Nigerians in general. When Shoprite, Mr. Price & Woolworth first came into the country, they were welcomed with open arms. In fact, the entry strategy into the country was based on price. Shoprite’s strategy and tagline is the lowest prices you can get.
Price as we know will always call the attention of Nigerians anytime, any day. So with this promise, most Nigerians especially Lagosians trouped into these fancy stores to catch a glimpse of these attractive stores. To an average Lagosian, these stores are a beauty to behold because for one, they offer a different ambiance away from the streets of Yaba or any other retail joint around.
However, one thing is certain, Lagosians’ appetite for price cuts can never be satisfied by fancy stores and a lovely ambiance. So here is the scenario, an average Nigeria who walks into any of these stores have a mental sieve that tries to match the price they are getting their items from these stores with what obtains on the streets of Yaba or their favorite plugs online or offline. After this mental assessment price wise, they in turn settle for the open market that offers variety and at a reasonable cost that won’t send them back to their villages. After a while, what happens is the footfalls decreases with time. I’m sure everyone will agree with me that with time, these super stores are landmarks or hangout joints for lovebirds.
Aside the price sensitive habit of Nigerians, government polices over the past five years hasn’t been favorable. In the past five years now, we have seen the government make major economic blunders that have either killed businesses or put some at the verge of closure. In particular, foreign owned business have had to bear the brunt of the harsh economic situation because they all trade in foreign currencies which hasn’t been stable in the past couple of years. In fact, as I write, the dollar is sold at the black market for as high as four hundred and forty naira (N440); and as we know, these brands all depend heavily on importation of their goods from outside the country.
To stay afloat in business, the likes of Shoprite will have to consider all the expenses involved in getting products and then add their margin to it which in my opinion is very minimal. As such, to minimize the impact of their losses, these brand will rather return to their home countries than to continue to bleed financially in a foreign land.
Interestingly though, the exit of Shoprite from the country leaves room for local investors to take over the chain of businesses and thereby continue to support the numerous families that depend on their employment in these organizations to keep food on their tables. Whether theses local investors will break even is a story for another day. However, in the meantime, we appreciate Shoprite for putting up about 15 years of fight in Nigeria but given the present realities will have to go. We would love to have you stay longer on our palettes but the gravitational pull of economic indices won’t allow!