One can only wonder what Whitey Basson — the visionary behind Shoprite’s aggressive expansion across Africa — thinks of the group’s systematic withdrawal from several countries on the continent.
Basson played a pivotal role in building Shoprite’s footprint outside South Africa from the 1990s to around 2000, steering ambitious expansion into markets including Zambia, Namibia, Angola, Ghana and Malawi. At its peak, the Shoprite Group operated in 17 African countries.
This was a period when Africa was widely seen as a land of opportunity, ripe with untapped consumers and growing demand for formal retail amid rapid urbanisation. The initial strategy focused on entering markets where grocery retail was predominantly informal, populations were growing and incomes were rising.
However, sustained losses in many of these markets have forced the group to retreat.
Alec Abraham, senior equity analyst at Sasfin Bank, sees Shoprite’s strategy as prudent risk management — exiting volatile African markets while reallocating capital towards South Africa.
He highlights currency mismatches — earning local currency revenues but paying dollar-based costs — and long, complex, even “treacherous” supply chains within African markets as major operational challenges.
The Shoprite Group’s operations in these countries have been challenged by currency volatility, restrictive economic policies, capital controls limiting profit repatriation and dollar-pegged lease agreements that squeezed margins. Frequent supply chain disruptions, including border delays, compounded the difficulties. High inflation and steep import duties further eroded profitability. Even modest proceeds from selling some African units did little to offset overall losses in these regions.
The group typically consolidates all non-South African African operations under one umbrella, rarely disclosing country-specific results. In 2023, 80.8% of net sales were from South Africa, while 91% of the group’s trading profit was generated from South African operations.
The recent exits from Ghana and Malawi mark the sixth and seventh African market withdrawals in four years, signalling a clear strategic pivot towards consolidating resources and capital in markets with stronger returns — primarily South Africa.
Analysts largely support this focus, arguing that capital is better deployed in South Africa or adjacent sectors, or even returned to shareholders through buybacks.
Robbie Proctor, investment analyst at Anchor Capital, notes that in the 2010s Africa was “in vogue”, prompting Shoprite’s expansive push, with Nigeria being one of its biggest bets — ultimately a costly failure, sold off years ago.
He says the closure of Nigeria left Ghana’s operation isolated and small. Given persistent forex issues even in relatively stable Ghana, further investment there was unappealing. “You want higher returns with lower-risk investments in broader Africa.”
He believes Shoprite will maintain its presence in Southern African Development Community countries — Namibia, Zambia, Angola and Botswana — and service these markets largely from South Africa through distribution centres.
“The expansion happened in a different era, when African markets and currencies were more favourable,” Proctor says. “The oil price collapse and ongoing volatility have dimmed Africa’s investment allure … The risk now outweighs the reward.”
He sees “white space opportunities” in South Africa where unmet consumer needs and limited competition create growth niches, a more attractive prospect than uncertain overseas markets.
Within South Africa, Checkers has been a standout performer and remains a primary growth driver for the group. The group has opened 283 new supermarkets in the past year and continues expanding into adjacent retail formats such as pets, clothing and outdoor gear. Its e-commerce platform, Sixty60, is thriving, increasingly distributing diverse products including electronics. In line with this refocus, the group sold its furniture division to Pepkor to sharpen its core grocery retail business.
Core investments are now centred on South Africa, where it has the biggest grocery store network in the country and brands that stretch across various categories.
The group’s retreat mirrors broader trends among South African retailers. Massmart exited Kenya, Uganda, Tanzania, Ghana and Nigeria (with Game) and Builders Warehouse closed its sole store in Nairobi in Kenya within three years of opening. Pick n Pay sold its Nigerian stake, Mr Price and Woolworths withdrew from Nigeria in 2013, and Pepkor pulled out of Zimbabwe.
Chantal Marx, head of investment research and content at FNB Wealth & Investments, says Shoprite benefited from first-mover advantage in Africa, establishing distribution networks and brand trust with consumers. “At the time there was also a push from South African property companies to build retail real estate in many of these countries, which made it easier for Shoprite to set up shop.”
However, she notes the harsh realities: limited scale due to scarce retail real estate and currency volatility, leading to South African companies gradually pulling back. She agrees the scale-back is wise, allowing management to focus on South Africa, where informal retail still accounts for about 30% of grocery sales.
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