Shoprite Nigeria Plans Neighbourhood Stores After Reopening Three Outlets

Shoprite Nigeria is planning to open smaller standalone neighbourhood stores as part of its recovery strategy after financial difficulties forced the supermarket chain to restructure its operations and temporarily close its outlets.

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 on Friday.

Adebiyi said three Shoprite stores had reopened after the company took the decision to temporarily shut its operations 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.

The company plans to expand through smaller, standalone supermarkets in residential neighbourhoods rather than depending primarily on large outlets located inside shopping malls.

“We’re going to be opening standalone neighbourhood stores, which was always the plan,” Adebiyi said.

The proposed approach is expected to help the retailer reduce its exposure to expensive commercial property arrangements and concentrate more of its resources on running its supermarkets.

Adebiyi explained that supermarkets typically operate from leased premises, with much of their investment going into equipment such as shelving, refrigeration systems and other facilities required for daily operations.

However, he said this model can make it difficult for businesses to secure conventional bank financing in Nigeria because lenders often demand physical assets as collateral.

According to the executive, MBO Capital encountered difficulties obtaining bank loans during the acquisition of Shoprite Nigeria because the business did not have enough conventional assets to satisfy lenders’ collateral requirements.

He said this remained a challenge despite the retailer generating billions of naira in revenue, forcing the investors to consider alternative ways of financing the business.

Foreign exchange volatility was another major factor behind Shoprite Nigeria’s financial difficulties, according to Adebiyi.

He disclosed that approximately 17 of the retailer’s 28 stores had rental agreements denominated in US dollars when the acquisition took place.

The depreciation of the naira subsequently increased the cost of those leases when measured in local currency, placing additional pressure on operating expenses.

Adebiyi said rent should ordinarily account for about eight to 10 per cent of a supermarket’s revenue, but some Shoprite locations faced substantially higher rental costs.

The company also encountered operational challenges, including weaknesses in inventory management and the loss of access to the enterprise resource planning system previously provided by its former parent company.

Adebiyi said replacing the system required billions of naira in additional investment, diverting funds that could otherwise have supported the retailer’s operations and recovery.

Shoprite Nigeria’s latest restructuring follows several years of changes in ownership and business 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 business.

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

The business later faced rising operating costs and difficult trading conditions. In June 2024, Nairametrics reported the closure of Shoprite’s 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 had begun 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 stores to reduce expenses associated with rent, electricity and diesel.

The latest plan signals a potential shift in Shoprite Nigeria’s operating model as the company seeks to rebuild its business around a more manageable cost structure.

However, the retailer has not disclosed how many neighbourhood outlets it intends to open, where they will be located or when the expansion will begin.

For now, the reopening of three stores and the proposed neighbourhood format represent key elements of the company’s recovery strategy as it works to address the financial and operational challenges that have affected its Nigerian business.