Shoprite Now Has Only Two Outlets In Kenya

During the week, Shoprite Holdings, a South African based international retailer, announced the closure of its branch in Nyali Mombasa, effective 31st August, revealing that trading at the branch was not viable.

The closure of the Shoprite outlet in Mombasa brings the number of remaining outlets in Kenya to 2: at Garden City and Westgate Mall in Nairobi.

This follows the continued scaling down of the retailer’s operations across the continent has recently announced plans to sell all or a majority stake of its business in Nigeria, citing re-evaluation of its operating model.

According to the retailer’s trading statement, its South African division grew by 8.7 percent while sales at its supermarkets outside South Africa fell by 1.4 percent.

“We attribute the reduced revenue inflows to constrained spending power among consumers due to a tough financial environment in the wake of the ongoing pandemic, which has resulted in the slowdown of the global economy,” said Cytonn Investments.

In addition to the exit of other retailers such as Botswana’s Choppies, and the existing oversupply of retail space with the introduction of 0.8 million SQFT of retail space in 2019, has continued to impact on the Kenya retail sector occupancy rates which dropped by 0.3 percentage points to 80.0 percent in H1’2020, from 80.3 percent in FY’2019 Cytonn H1’2020 Market Review.

“In our view, the scaling down by retailers is attributed to constrained spending power among consumers due to a tough financial environment in the wake of the ongoing pandemic, which has resulted in reduced disposable income,” said Cytonn.

According to the analysts at the real estate company, they expect decentralization, as in the case of international financial institutions such as International Finance Corporation (IFC) buying into companies such as Naivas, will strengthen the retailers’ financial muscle thus boosting operations.

“Nevertheless, we expect the sector’s performance to continue being phased by the tough economic environment, in addition to the shift to e-commerce,” added Cytonn.

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