Shoprite’s Business Model No longer Applicable in Nigeria

Business gist

Posted  531 Views updated 3 years ago

The news of  South African owned superstores Shoprite leaving Nigeria has been flying all over the social media with lots of people blaming the federal government policies for the exit talks. Even though Shoprite has cleared the air about leaving, a large number of citizens still believe that they are set to leave after 15 years of business.

There are different reasons why the Grocery giant will exit of which the Nigerian government policies play a role but the major reasons are centered on their business models and Customers preferences.

The Business model of Shoprite that was introduced in Nigeria 15 years ago was appropriate because there was nothing like that. Mega stores were very few and were located in highbrow areas like Ikoyi, Victoria Island and Lekki with some in Ikeja. Everybody was thrilled when Shoprite came to Lagos with large grocery departments and cinemas. The pull of customers was so strong that people travelled long distances to buy just groceries. It was an adventure for lots of people who have never experienced what buying in a mega stores was.

As at that time, the Business model worked to their advantage and in order to capture the whole of Lagos, they started opening different outlets. Their model was to open very large malls in strategic locations. One thing they did not put into consideration was the presence of rich Nigerian business men and other competitors. The presence of Shoprite brought about the upgrades of so many stores into mega stores. Lot of competitions has stepped up in their strategies and overhead costs. Mega stores have found their ways closer to consumers meeting their supplies at even cheaper prices.

Consumer behaviors have changed. With the rise of online shopping taking a major stake in buying behaviors (thanks to the Covid 19 pandemic), so many consumers save time, stress of going to Shoprite etc and receive their order at their doorstep. Also with lots of supermarkets closer to consumers’ homes, it is easy to take a walk to get the same groceries that you will travel a long distance to get at Shoprite.  There are newer Cinemas with better standards and cheaper prices to watch movies and also closer to consumers.

In order for Shoprite to survive in the country’s business clime, they must change their strategies and engage in the online order business. They should try to reduce their overhead costs by building smaller departmental units and study their competitors.

Photo Credit: Businessamlive

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