Shoprite Nigeria plans to expand through smaller standalone neighborhood stores as it restructures its business to contain costs, restore operations and reduce its dependence on large shopping malls, according to Adekunle Adebiyi, Executive Director, Investments at MBO Capital Management Limited.
The shift marks a potential change in the retailer’s operating model as it attempts to recover from financial pressures linked to foreign exchange volatility, high occupancy costs, working capital constraints and operational disruptions. Rather than relying primarily on large-format supermarkets in shopping centers, the company intends to move towards outlets that require less capital and may be cheaper to operate.
Speaking on Nairametrics’ Drinks and Mics, Adebiyi said three Shoprite stores had reopened following a temporary shutdown that allowed the business to negotiate with suppliers and address outstanding financial obligations.
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“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.
The reopening represents an initial step in the recovery process, although the company has not disclosed how many additional stores it intends to launch, where they will be located or when the expansion will begin.
The move mirrors the model of Bokku, a last-mile retail outlet that has recorded rapid expansion across Nigeria.
Adebiyi said the planned neighborhood outlets would allow Shoprite to focus on its core retail business without tying up substantial capital in property development.
“We’re going to be opening standalone neighborhood stores, which was always the plan,” he said.
The approach would reduce the retailer’s dependence on large shopping malls, where rent, electricity, and diesel expenses can weigh heavily on profitability. Smaller stores could also allow the company to serve customers closer to residential communities.
The strategy is consistent with a supermarket model in which retailers lease suitable commercial properties instead of purchasing buildings outright. Adebiyi said such leases can extend for as long as 10 years, while the retailer concentrates its investment on shelves, refrigeration systems and other equipment required to run the business.
However, this asset-light model can create financing difficulties in markets where banks place considerable emphasis on fixed assets as collateral.
Adebiyi said MBO Capital encountered challenges obtaining conventional bank financing during the acquisition of Shoprite Nigeria because lenders struggled to identify sufficient tangible assets to secure credit. Despite the retailer generating billions of naira in revenue, its operating model did not fit neatly into traditional asset-backed lending requirements.
The investors consequently turned to alternative funding arrangements to complete the acquisition.
This financing constraint highlights a broader challenge for retailers operating in Nigeria, where a business can generate substantial sales and possess an established customer base without owning enough property or other fixed assets to satisfy lenders. For supermarkets, much of the value lies in inventory, supplier relationships, distribution capabilities, and customer traffic rather than real estate.
While a neighborhood-store strategy could reduce the amount of capital required for expansion, it would not automatically resolve the company’s financing problems. The retailer would still need sufficient working capital to purchase stock, pay employees, maintain equipment and meet lease obligations while generating enough sales to cover its expenses.
Currency volatility was another significant factor in Shoprite Nigeria’s financial difficulties, according to Adebiyi.
He disclosed that approximately 17 of the retailer’s 28 stores had dollar-denominated rental agreements when the acquisition took place. The naira’s subsequent depreciation increased the local-currency cost of those leases, putting additional pressure on operating expenses.
Adebiyi said rent would ordinarily account for about 8% to 10% of a supermarket’s revenue, but some Shoprite locations faced substantially higher rental burdens.
Dollar-linked leases create a mismatch for retailers whose sales are largely generated in naira. Even if customer demand and sales volumes remain stable, depreciation can increase rent in local-currency terms without a corresponding rise in revenue. The result is pressure on margins and cash flow, particularly when other expenses, including electricity, diesel and logistics, are also increasing.
Adebiyi also acknowledged operational weaknesses, including problems with inventory management and the loss of access to the enterprise resource planning system used by Shoprite’s former parent company.
Replacing the system required billions of naira in additional investment, he said, diverting resources that could otherwise have supported the retailer’s operations.
Inventory management is important in supermarket businesses, where profitability depends on controlling stock levels, limiting waste, maintaining product availability and managing supplier payments. Weak systems can leave retailers with excess inventory in some categories and shortages in others, tying up cash while undermining sales.
The technology transition therefore added another layer of pressure to a business already dealing with currency-related costs and financing constraints.
Ketron Investment Limited, a consortium led by Persianas Investment Limited, completed the acquisition of Shoprite Nigeria in June 2021 after South African retailer Shoprite Holdings decided to exit direct ownership of its Nigerian business. Retail Supermarkets Nigeria Limited subsequently took over operations under a franchise arrangement, with MBO Capital Management among the advisers involved in the acquisition.
The business continued to face difficulties after the transaction. In June 2024, Shoprite announced the closure of its Wuse store at Novare Wuse Central Mall in Abuja, citing the prevailing business climate and the outlet’s financial performance. Reports in 2025 also pointed to temporary store closures and operational disruptions associated with working capital constraints, electricity costs, and other expenses.
In March 2026, Shoprite said that it was not exiting Nigeria but implementing a phased restructuring programme that began in August 2025. Bunmi Adeleye, Chief Strategy Officer at Retail Supermarkets Nigeria Limited, disclosed plans to reopen outlets at The Palms Shopping Mall and Circle Mall in Lagos while exploring smaller neighborhood formats to reduce rental, electricity and diesel expenses.
Adebiyi’s latest comments are seen as an indication that the restructuring is now focused on restoring operations while reconsidering the economics of the store network.