Get Ready For Nigerian Supermarket War

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Get ready for the Nigerian supermarket wars. Within weeks of each other, two major retailers have announced their intention to battle it out in Africa’s largest consumer-goods market.


At the end of July, news broke that Walmart, the world’s largest retailer, was planning to launch in Nigeria’s commercial hub, Lagos. And on Tuesday (Aug. 18), South Africa’s Shoprite—which also happens to be Africa’s largest retailer by sales—announced that it would be opening 14 more stores in Nigeria within the next 20 months, in addition to the 12 it already has in the country.
While Walmart hasn’t yet said when its first store in Lagos will open, it already has a limited presence in Nigeria through its subsidiary company, Massmart—a South Africa-based retailer that it acquired five years ago. But Shoprite has some things working in its favor.
First, there’s the matter of space. The shortage of big malls and commercial real-estate space in Nigeria means retailers often have to pay high rents. Woolworths, an upscale South African retailer (unrelated to the Woolworth chains of other countries), closed its three Nigerian stores in November 2013 after they’d been open for just a year and a half, citing a lack of shopping malls, “ridiculously” high rents, and a stifling bureaucracy.

Shoprite likewise struggled to find retail space for its expansion plans. So it decided to form its own real-estate arm, the Resilient Property Income Fund. In 2012, Resilient and Shoprite announced that they would spend $125 million building 10 malls in Nigeria, many of which would have Shoprite as the anchor tenant.
This is why Shoprite has been able to roll out new stores faster than its competitor, Massmart. The latter, also South Africa-based, has operations in 12 countries, including Nigeria. Walmart acquired it as a gateway for its entry into high-growth sub-Saharan markets. In 2013, Massmart announced that it aimed to launch 90 new stores (paywall) across sub-Saharan Africa within three years.
But two years later, Massmart doesn’t seem to be close to its target. According to Reuters, it has managed to open only 10 new stores outside South Africa since 2010, while Shoprite has added 150. A lack of retail space and malls, along with poor infrastructure and failed acquisitions of grocery chains in Kenya and Botswana, are among the obstacles Reuters cites.
Shoprite has also managed to tailor its model to appeal to the tastes, as well as income levels, in the different African countries where it operates. In Angola, for instance, instead of limiting itself to being an old-fashioned megastore, Shoprite decided to open a “no-frills” supermarket chain for low-income customers, Shoprite U-Save, which has lower overheads and charges lower prices on basic food items.
In addition, Shoprite has innovated around the traffic bottlenecks and port delays that make delivering food a challenge in many African countries. For example, the Economist reports (paywall) that in Nigeria, Shoprite has a warehouse stocked with flour so it can provide fresh bread to its supermarkets. Walmart could probably learn a thing or two.

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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