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Shoprite prepares to control Ugandan retail market

| International retailers

As Nakumatt Holdings Limited struggles for a lifeline in a financially-constrained market, Shoprite supermarket is adopting a new expansion plan to boost its presence.

The South African franchise is to open up two new branches – one at Acacia mall in Kamwokya and another at Victoria mall in Entebbe.

Knight Frank, a real estate company, has signed up Shoprite Holdings and other international brands to take over the space that Nakumatt once occupied at Acacia mall.

According to Marc Du Toit, the head of retail at Knight Frank Uganda, signing up Shoprite is meant to boost traffic at their different shopping malls within the metropolis.

“Shoprite’s addition to the mall’s tenancy will re-affirm Victoria mall as the top family shopping destination in Entebbe since its opening in 2013. Shoprite will offer a broad range of goods and services including household items in addition to its primary food business,” said Du Toit in a statement.

The expansion into Victoria mall and Acacia mall seems to be part of Shoprite group’s expansion strategy at a time when the middle-class appears to be growing. Victoria mall is ideally located five minutes away from Entebbe International airport, where most tourists to the country take their first shopping experience.  

In a statement to The Observer, Pieter Engelbrecht, the chief executive officer of Shoprite Group, said: “We have now achieved 64 consecutive quarters of like for like sales growth. Our latest results are proof that the group is healthy and able to thrive across multiple brands and countries, notwithstanding the headwinds.”

Shoprite is listed as a public company on the Johannesburg Stock Exchange and with secondary listings on both the Namibian and Zambian stock exchanges. The group operates 2,689 outlets in 15 countries across Africa and the Indian Ocean islands. 

MARKET WOES

Shoprite was the second international retailer, after Metro, to open shop in Uganda in 2000. When Metro was weighed down by a Barclays bank loan, and closed shop, Shoprite enjoyed the market uninterrupted until Kenya’s Uchumi launched services in 2005.

Some say it was partly due to the virgin market Shoprite was enjoying in Uganda that attracted regional retailers such as Nakumatt, Uchumi and Tuskys.

The competition among the supermarkets in the face of a tough economic environment, where a spike in inflation and a depreciation of the shilling have eaten into the revenues of the retail shops, made it tough for Shoprite.

For instance, in 2015, Shoprite Holdings signaled that it was embarking on disposing some of its assets in the East African region. It sold its three branches in Tanzania, citing low business sales.

Within the same time span, Shoprite also closed one of its largest outlets in the region at Metroplex mall in Naalya. Nakumatt occupied the Naalya premises until September, when it also closed.

It now appears that Shoprite’s expansion plan is down to the market being there for the taking. With Nakumatt following Uchumi in exiting Uganda, and uncertainty hovering over Tuskys, Shoprite appears to see an opportunity to dominate the market.

Shoprite’s opening another branch at Acacia mall and Victoria mall will bring its number of outlets to four countrywide.

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