- Lagos Big Boy, Palms Shopping Mall Owner, Tayo Amusan Sets To Buy ShopRite, To Rename It Jarra.
After Nigerians woke up to the news that Africa’s largest retail chain, ShopRite is considering divesting from its Nigerian retail entity, Retail Supermarkets Nigeria, fresh indications have emerged on the factors responsible for the development.
According to information available to The New Diplomat, an ongoing legal tussle with Chief Henry Akande and the $10m damages awarded against ShopRite coupled with the fierce competition with Online Retail stores like Jumia, and other retail stores like Spar, Ebeano are some of the reasons for ShopRite’s impending departure from Nigeria.
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In 2011, Nigerian company A.I.C Limited (the Claimant), which is owned by Chief Henry Akande, issued a summons against Shoprite South Africa and its Nigerian subsidiary for an alleged breach of a Joint Venture Agreement (the JV Agreement) allegedly concluded in 1998. The company took Shoprite to court claiming it breached on an agreement to set up the Nigerian arm of the business. The Federal High Court then ruled in favor of AIC and awarded damages of $10 million against Shoprite in 2017. Shoprite appealed the judgment in the appeal court and lost again earlier in 2020.
‘The fear of losing again at the Supreme Court and being made to pay that whopping amount in damages is worrisome and the company might have decided to cut its loss by taking the easy way out’ the insider said.
Another reason that led to the impending exit of the retail giant is the emergence of online shopping which has been buoyed by COVID 19 which is stifling ShopRite’s profitability.
It is no longer news that many Nigerian are fast embracing online shopping experience. Jumia, one of Nigeria’s largest online retail outlets revealed an ‘unprecedented demand to join the Jumia platform, especially for named brands. Those dynamics are helping the acceleration of the shift toward online shopping.
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Similarly, local competitors like Spar and Ebeano are offering online shopping experiences and the delivery of goods to customer’s doorsteps. This is something that Shoprite is yet to implement, their business model relies heavily on physical store visits.
Indications also emerged that Lagos big boy and Chairman, Persianas Group, Tayo Amusan is in a fierce race to buy the ShopRite, and plans to rename it to Jarra.
Amusan is no stranger to the retail shopping mall experience as he is the owner of The Palms Shopping Malls which he introduced and firmly established as the concept of retailing as a leisure destination within Nigeria when it built its flagship mall in Lekki in 2004. In reflecting on the success of The Palms, Persianas has recently acquired the land adjacent to the original mall and is embarking on a bold expansion plan to create The Palms extension.
Recall that South African owned superstore, ShopRite has announced its plan to leave the Nigerian market 15 years after it operating in the country.
According to a statement issued earlier in the day of their Operational And Voluntary Trading Update (52 Weeks Ended 28 June 2020), they declared they would be classifying Nigeria as “discontinued operations’ in their next filing.
“Following approaches from various potential investors, and in line with our re-evaluation of the Group’s operating model in Nigeria, the Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited. As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time” the statement reads.
