Shoprite plans to move out of Kenya permanently in January 2020 after suffering a 3.2 billion loss in the year that ended in June 2020.
Already, the retailer has notified the Kenya Union of Commercial Food and Allied Workers that it will close its operations in Kenya with the closing of the head office in January.
Shoprite, the South African retailer has only been in Kenya for a period of two years. Among the stores that are already closed are Westgate Mall, Garden City, Karen branch, and the City Mall branch that is located in Nyali, Mombasa.
This move will hurt the Kenyan economy, as hundreds of jobs will be shed adding to more that have been lost in the year 2020 following the effects of the Covid-19 pandemic.
Shoprite Redundancy Letters
Shoprite redundancy letters seen by ShopaXo reads, “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 letters were sent to its employees stating that the business is no longer viable and that the retailer had made a loss of Ksh. 3.2 billion this year.
“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,” the retailer added.
According to CEO Pieter Engelbrecht, Shoprite Chief Executive Officer, Kenya’s three stores have continued to underperform relative to return requirements while one store had been closed due to the effects of COVID-19.
He was speaking during the live presentation of the retailer’s results. However, generally, Shoprite continued to register a 6.4% growth in sales for the year ending June across its 2300 stores in Africa.
Most of the losses the retailer is experiencing are for stores outside South Africa. As a result, Shoprite is closing down its stores outside of South Africa.
The company lost Ksh1.8 billion from stores outside of South Africa, of which Kenyan Stores contributed the most loss.
Shoprite now joins other supermarket retailers in Kenya that have either closed or are struggling, among them Uchumi, Nakumatt, and Tuskys.
Only Naivas, which continues to open more stores, Quickmart, and Carrefour seems to have what it takes now to make money in Kenya.
When setting shop in Kenya, Shoprite said it was taking advantage of the disarray in Kenya’s retail sector; however, it seems that it has fallen victim to the disarray.
Even as it closes, Shoprite had plans to expand its presence in the country by opening more branches in the country, most of which were to be located in Nairobi.
Another supermarket giant leaves the Kenyan Market after Nakumatt, and Uchumi collapsed.