DRC: Why Shoprite has decided to close shop

By Aurélie M'Bida, Stanis Bujakera Tshiamala
Posted on Wednesday, 30 November 2022 13:36

Shoprite supermarket in Kinshasa © Junior Didi Kannah for JA

10 years after setting up shop in Kinshasa and Lubumbashi, the South African supermarket chain Shoprite has decided to throw in the towel, citing a refocusing strategy.

Its initial project in the country was very ambitious, just like the continental expansion project the company started in 2017. However, since 2012, the Shoprite supermarket chain has only opened three shops: two in Kinshasa and one in Lubumbashi.

In a press release dated 21 November, Shoprite DRC announced that it was ending its activities in the country so that the group could focus “more on its activities in South Africa”. The parent company, Shoprite Holdings, told us its strategic considerations: “in line with the ongoing evaluation of the Shoprite group’s activities, the review process and the long-term strategy, operations in the Democratic Republic of Congo are being discontinued”.

The group has made sure to thank the “government, [the] institutions, [the] customers, [the] suppliers and [all] employees for the support during all the years the group has been doing business in [the] DRC”.

According to our information, the South African retailer’s Congolese business is worth between $14m and $25m annually. Its departure from the DRC reflects the difficulties the company has faced in establishing itself in its “test country in French-speaking Africa”.

Fragile economic health

The company made a similar announcement in Madagascar and Uganda, which came hot on the heels of its exit from Kenya, just two years after its entry into this market. Shoprite Holdings, headed since 2017 by Pieter Engelbrecht, says these are part of the group’s “continued operational consolidation”.

In 2012, the group was betting on the rapid economic growth and strong demographic potential of Kinshasa, which is set to reach 20 million inhabitants. It planned to build a network from the capital and then into other major cities for a robust supply chain, similar to the project in Nigeria.

Five years later, the group announced its intention to invest $80m in the DRC, but the country’s fragile economic health and instability undermined these ambitions. The opening of a second superstore in Lubumbashi, which had been mooted for a while, was postponed indefinitely, François Okamba, Shoprite DRC’s manager, told us in 2017.

According to several sources, the R84bn-turnover group closed shop in Kinshasa and Lubumbashi due to currency volatility, high inflation (7.79% in May this year), high import duties and dollar rent. Shoprite could still have given its DRC operations a reprieve – there was never any mention of it ceasing operations in its financial communication, “but the business climate, the political situation and the attitude of the company’s local managers did not favour this,” says one of our interviewees who is familiar with the company’s activities.

Fragmented market

For now, Shoprite must finalise its withdrawal from the DRC and honour its contractual commitments for several more months. The supermarket chain is still present in 10 countries on the continent, except South Africa. We have learned that the Lubumbashi site will officially be closed by the end of the month and a statement is expected at the end of the week in Kinshasa.

According to Shoprite Bandal, a popular commune of Kinshasa, the group is considering a Congolese takeover. Its shops are already announcing large sales to the public to liquidate products. This departure, following that of the Hasson & Frère group in 2018, is expected to be a success for the plethora of local supermarkets.

In this highly fragmented sector, where the majority of brands are owned by Indo-Pakistani, Chinese and Lebanese expatriates, potential buyers are numerous. In Kinshasa, there is City Market (Sun Rise); Kin Mart, the supermarket chain Regal (a subsidiary of Gay Impex); S&K (Samay Karim’s initials); and the GG Mart chain, which is well established in the capital.

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