Shoprite Sees Lack of Properties Holding Back Nigerian Expansion

Shoprite Holdings Ltd.’s plans to expand in Nigeria are being slowed by a lack of available sites as the grocer looks to grow revenue outside its home market.

Nigeria, with more than 160 million people, could eventually carry about the same number of stores as Shoprite has in South Africa, Chief Executive Officer Whitey Basson said in a presentation in Johannesburg yesterday. South Africa’s largest retailer, which has more than 800 stores in its home market, is in the process of adding 37 stores to the seven it already has in the West African country.

“Nigeria could handle 600 to 800 stores if you look at the size of the cities,” Basson said. “Growth in Nigeria can go quickly, but that’s not dependent on Shoprite, but on sites. Non-South Africa property development is slower than we like.”

As food retail in South Africa is becoming saturated and more competitive, Shoprite is expanding in the rest of Africa. Sales for the year through June climbed 28 percent to 11.7 billion rand ($1.1 billion) in supermarkets outside its home market as the rand weakened against the dollar and some African currencies, making imports from South Africa more affordable. Supermarkets in the region contribute 14.2 percent to total revenue.

In addition to a lack of available property, supply lines outside of South Africa “remain a huge challenge,” Basson said. Shoprite’s lead time in Nigeria is 117 days and the retailer is considering building a distribution center in the west African country.

Before it's here, it's on the Bloomberg Terminal.