Africa’s largest supermarket chain Shoprite Holdings will lay off 115 workers and close its second branch in Kenya in less than five months, citing reduced flow of shoppers.
Shoprite, which opened its first store in Kenya in 2018, has informed the workers’ union of the closure of the City Mall branch in Nyali, Mombasa, and job cuts.
“Endeavour to continue trading at the Nyali branch is no longer viable. Financial and other data will be provided and discussed at a proposed meeting,” Shoprite said in a notice to the Kenya Union of Commercial Food and Allied Workers (KUCFW).
“It is contemplated that the intended date of termination on account of redundancy will be August 31, 2020. There are currently 115 persons employed at the branch of which 92 are members of KUCFW.”
The retailer, which is retreating in countries outside South Africa, in April closed its Nairobi’s Karen branch, shedding 104 jobs and triggering a court battle with the billionaire owners of Waterfront Mall.
The closure of the stores will put a dent in Shoprite’s expansion plans in Kenya, where it has remained with two branches and had targeted opening seven stores, including six in Nairobi.
Its reduced branch count comes amid increased competition from cash-rich retailers such as Naivas and Carrefour in a sector where local retailers like Tuskys are struggling with lower sales and mounting debts.
When setting shop in Kenya, Shoprite said it was taking advantage of the disarray in Kenya’s retail sector.
Two of Kenya’s three top retailers Uchumi and Nakumatt were in trouble, with the former having closed stores.
Former regional leader Nakumatt collapsed.
“Retail in Kenya currently is in total disarray...we could now go in and secure seven premises without paying anything other than agreed rental,” Shoprite said ahead of Kenya entry.
Shoprite was an anchor client at Karen’s Waterfront Mall and Nyali’s City Mall.
The billionaire Muguku family, which owns Waterfront Mall, has sued Shoprite and is seeking Sh520 million in lost rent after the retail chain cut short its tenancy at the mall.
Shoprite, 17-per cent owned by retail tycoon Christo Wiese, has grown from eight supermarkets in 1979 to a no-frills mass-market grocer with operations in 15 African countries, including two stores in Uganda.
Shoprite Holdings said Monday that it was considering reducing or selling all of its stake in its Nigerian subsidiary.
The company has been reviewing its long-term options in Africa as currency devaluations, supply issues and low consumer spending in Angola, Nigeria and Zambia have weighed on earnings.
Shoprite, which owns more than 2,800 outlets across Africa, said in a trading update that it was pursuing the sale after reviewing its operating model and receiving approaches from various investors.
In February chief executive Pieter Engelbrecht told analysts that Shoprite remained committed to the continent but not at any cost.