Shoprite in Nigeria: 10 Years of Effort Summarized in One Important Piece of Data

Jan 18, 2016

Shoprite Logo

At the end of last week, Shoprite released a little nugget of information about its Nigerian store operations: more than three quarters of the products it sells – 76%, to be precise – are procured locally. Shoprite has built relationships with 300 suppliers, including fresh produce vendor Batfol Farms in Lagos and Fresh Country Chicken in Kwara.

Headline retail success is typically defined in terms of sales, customer numbers or store footprint. But less so in terms of building and maintaining supplier networks, the underlying success of the limited number of African grocery retailers capable of competing with large multinational supermarket chains such as Casino or Carrefour.

Certainly, Shoprite has had to sweat its existing South African suppliers hard in the early days – impacting how well it was able to tailor its product mix to Nigerian consumers and limiting its ability to keep prices low. Still, Shoprite has a more premium positioning in Nigeria, where many consumers treat it as a specialty store, than it has in its home South African market.

Shoprite in Africa

Shoprite in Africa

Shoprite strategically exited East Africa, partly because it found that Kenyan supermarket retailers such as Nakumatt and Tusky’s had a consolidated grip on supplier relationships. In Nigeria, the South African chain stands head and shoulders above both domestic and foreign supermarket retailers in two ways: its reach across major cities and the quality and scale it brings to its retail operations (including its supplier relationships).

Shoprite has 16 stores in Nigeria and is the second largest chain in the country. The Nigerian market can ultimately support several chains with more than 1,000 stores each and is totally fragmented. At face value, Shoprite can be quickly challenged. But the lesson for inbound retailers is that the depth and quality of Shoprite’s supplier relations has taken more than 10 years to build, using lessons learnt from a long track record of market entries across Southern, West and East Africa.

As the race for retailers to expand across West Africa particularly intensifies, the operational foundations of those expansion plans will become more important. Shoprite has built itself an enviable operational base that is unmatched by Massmart and which will stress test the quality of the partnerships Casino and Carrefour have established to facilitate their expansion.

 

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