Shoprite Nigeria is planning to open standalone neighbourhood stores as part of efforts to revive its operations, following financial difficulties that forced the retailer to restructure its business.

Adekunle Adebiyi, the Executive Director, Investments at MBO Capital Management Limited, an investor in Shoprite Nigeria, disclosed this during an interview on Nairametrics’ Drinks and Mics on Friday, where he discussed the supermarket chain’s financial challenges and recovery plans.

Adebiyi said three Shoprite outlets had reopened after the company temporarily shut its operations to negotiate with suppliers and address 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.

He explained that the company planned to expand through smaller standalone outlets in residential neighbourhoods rather than relying primarily on large shopping malls.

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

The approach is expected to allow the retailer to concentrate its resources on supermarket operations rather than committing substantial capital to property development.

Adebiyi said supermarkets typically operate from leased premises, with investments focused on equipment such as shelves and refrigeration systems.

However, he noted that this business model could create financing difficulties in Nigeria, where banks often require tangible assets as collateral for loans.

He disclosed that MBO Capital encountered challenges securing bank financing during the acquisition of Shoprite Nigeria because lenders struggled to identify sufficient physical assets to support the transaction.

Despite the retailer generating billions of naira in revenue, the structure of its business made it difficult to obtain conventional asset-backed financing, prompting the investors to explore alternative funding arrangements.

Adebiyi also identified foreign exchange volatility as a major factor behind Shoprite Nigeria’s financial difficulties.

According to him, about 17 of the retailer’s 28 stores had rental agreements denominated in dollars when the acquisition took place.

The depreciation of the naira subsequently increased the cost of those leases, putting additional pressure on the company’s operating expenses.

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

The executive also cited operational challenges, including weaknesses in inventory management and the loss of access to the enterprise resource planning system used by the former parent company.

He said replacing the system required billions of naira in additional investment, diverting funds that could otherwise have been used to support the business.

Shoprite’s current recovery efforts follow a series of operational challenges and changes in ownership.

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 operations.

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

The retailer later faced further pressure from rising operating costs and difficult trading conditions. In June 2024, Nairametrics reported the closure of its outlet at Novare Wuse Central Mall in Abuja.

In March 2026, Shoprite told Nairametrics that it was not leaving Nigeria but implementing a phased restructuring programme that began in August 2025.

The Chief Strategy Officer at Retail Supermarkets Nigeria Limited, Bunmi Adeleye, had also disclosed plans to reopen outlets at The Palms Shopping Mall and Circle Mall in Lagos while exploring smaller neighbourhood store formats to reduce expenses on rent, electricity and diesel.

However, the company has yet to disclose the number of new neighbourhood outlets it intends to open, their proposed locations or a timeline for the expansion. (Saturday PUNCH)