Popular retail giant; Shoprite will be closing all its operations in Kenya this January, as a result of losses it suffered to the tune of 3.2 Billion Kenyan Shillings for the year which ended in June 2020.
Although this news first broke out in 2020, the exit has now officially been confirmed for January 2021. Shoprite has already notified the Kenya Union of Commercial Food and Allied Workers, letting it know that it will be shutting down its head office this month, effectively putting an end to its two years of operating in the East African nation of Kenya.
The retail giant has so far closed four of its outlets in Garden City, its Karen branch, its City Mall branch at Nyali, Mombasa and Westgate Mall. It has also let fo of hundreds of its workers due its operations in Kenya experiencing underperformance.
In redundancy letters written to its remaining workers, Shoprite revealed that its business in Kenya is no longer viable since it had suffered a loss of 3.2 Billion Kenyan Shillings in 2020.
The redundancy letters by Shoprite revealed that, “Endeavors to continue trading in Kenya is no longer viable. The company suffered losses in the amount of Sh3.239 billion for the 2019/20 financial period.”
The retailer added that, “In line with the company’s decision to exit the Kenyan market, it intends to permanently close the home office. It is contemplated that the proposed closure will cause employees at the said office to be declared redundant.”
Shoprite is reportedly also leaving other countries where it has operations outside of South Africa. The exits are blamed on the shutdowns and lockdowns going on across the continent, as a result of the ongo Coronavirus pandemic. Said shutdowns and lockdowns inevitably led to a drop in consumers coming to physical retail stores.
The Chief Executive Officer (CEO) of Shoprite; Pieter Engelbrecht made it known via a live cast presentation of Shoprite’s results, that its stores in Kenya have continued to underperform in relation to return requirements with one additional store closing down as a result of the economic strains brought on by the Coronavirus pandemic.
The retail giant which has an impressive 2,300 stores across Africa, was able to achieve an overall increase in sales of 6.4 percent for the year which ended in June 2020 in spite of the pandemic.
It however posted a loss of 28.2 million South African Rand (about 1.8 Billion Kenyan Shillings) for its business outside South Aftica, including its Kenya stores.
Its decision to leave Kenya is coming at a time where there has been an increase in the number of big player competitors in the retail space. Names such as Carrefour, Quickmart, and Naivas have all become strong contenders with popular brands like Tuskys, fighting increasing debts and lower sales.
When Shoprite first launched in Kenya, it revealed that it was capitalizing on the chaos in the retail scene in Kenya. At the time two of the nation’s top 3 retailers; Nakumatt and Uchumi, were going through troubled waters with Uchumi closing all its stores and Nakumatt declining steadily.
Shoprite had initially planned to set up a total of 7 stores in Kenya with 6 of those stores being in the nation’s capital of Nairobi.
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