Real reasons behind Shoprite’s planned exit from Kano

Retail Supermarkets Nigeria Limited, owners of the popular Shoprite Mall, recently announced its intention to cease operation in its Kano branch, North West, Nigeria from January 14, 2024.  

This was contained in a circular signed by the management of the supermarket.

The store, located in Ado Bayero Mall, said it would not continue operations in the state due to the current financial situation of the mall in the state, as well as the difficult business climate in the country.  

In the circular, the supermarket noted that the decision was regrettable but however necessary, hinting that all the employees working at the mall would be laid off once it ceases operation in the state.  

Meanwhile, there are underlying factors said to have been responsible for the planned relocation. Daily Trust unearthed the factors responsible for the exit of the supermarket.

It was gathered that one of the major reasons is that Shoprite pays rent to Ado Bayero Mall a wholesome amount of N66million on a monthly basis, aside from the independent electricity bill they get from the Kano Electricity Distribution Company (KEDCO), and the cost of fuelling and maintenance of its standby generator.

This is also aside the salary of staff and other expenses incurred for the day to day running of the business outfit.

On the issue of rent, this translates to the supermarket paying a wholesome amount of N792m in a year and over N1billion when summed up with staff salaries, electricity, running cost, maintenance, among others.

Speaking on the condition of anonymity, a shop owner in the mall told our correspondent that all the reasons given by the mall were valid as it had been witnessing decline from customers’ patronage since the last two years.

“Since the last two years, the entire mall has been witnessing reduction of customers due to the dwindling economic situation in the country.

“It is the elite that mostly buy expensive things from here, and they only form a minority of the customers. Secondly, they don’t come around often. Business can’t go well like that.

“The average Kano resident is struggling with finances and cannot afford to come and spend recklessly here.

“If you study carefully, the place has been reduced to where you come to buy time, take pictures and other things and move out. Averagely, people go into Shoprite to buy drinks, ice cream and chocolate that is not more than N1000. Now, looking at the kind of services they render, how much would they make in a month to pay N66million and get profit?”

Another businessman who owns a place in the mall but asked not to be named revealed that a medium business space in the mall is given out at the rate of N3m and N4.5m quarterly, which he described as too expensive.

“A shop like mine here starts from N3m to N4.5m quarterly, and this is beside electricity provided by the mall. We pay at least N120,000 to N150,000 every month for electricity. 

“Majority of the shop owners are just struggling to stay afloat. I don’t think it is hard to say they are making that kind of money to pay their rent. They are just paying rent alone.

“Like the one next to me here, I know that he has other subsidiaries outside, and I believe those ones are the ones keeping the one here. You know some elite class would probably be comfortable coming to the one here than other shops that are much more public.

“Two people have confirmed to me that the mall here is the most expensive in the country compared to the ones in Abuja and Lagos,” he said.

Daily Trust on Sunday further looked at the effect of the development on businesses outside the mall and how it will have a negative influence on them as it is surrounded by plazas filled with different types of business entities.

While it was gathered that some shop owners inside the mall have relocated to these plazas, there is the fear that the exit of Shoprite will affect them negatively.

Bashir Abdullahi also said, “You see, many people coming around here do so because of Shoprite. You can see different kinds of people and I don’t have to tell you.

“Some businesses here get additional customers because of the mall, and 80 per cent of them were coming to Shoprite before they saw us. It will surely affect our businesses here.”

The main reasons 

The secretary, National Association of Supermarkets, Umar Habu Ibrahim, also said that while there are a lot of supermarkets that have closed shops in the state recently, the case of Shoprite is different.

He said, “There are a lot of factors responsible for the close down of supermarkets. One is the economic situation and the rate of foreign exchange and cost of transportation. It has affected them seriously.

“Games first exited for almost a year now. The reasons why Shoprite is closing is first, exchange rate because they import wares from abroad; secondly, it is not about patronage but non cordial relationship with Ado Bayero Mall.

“The mall, in my view,  has no strategy and policy where the common man can invest. They give out rent based on square metres. We are not used to that, and you have to pay monthly.

“There are at least 80 shops in Ado Bayero Mall, both big and small ones. And you are the one to pay for electricity, water and tax, aside the exorbitant rent fee. Many have gone there and exited, but the management of the mall doesn’t care.

“One thing that escalates the issue is that they keep increasing the fee almost every time. When they first came to the mall, dollar rate was not as expensive as it is now. They need to reconsider that, but they don’t.

“It is a problem with the management of Ado Bayero Mall. This is a place where almost 1,000 people are working.”

Asked about the association’s efforts in terms of intervention, he said that already, elders in the state, including politicians, had intervened but it was too late.

200 employees to lose jobs 

Daily Trust on Sunday reports that at least 200 employees of Shoprite may join the league of the unemployed if the supermarket eventually closes its Kano branch.

A staff of the supermarket who disclosed this on condition of anonymity said they had begun searching for new jobs already while many others were confused.

These employees include cashiers, chefs, bakers, security guards, cleaners, among others.

“We are in a state of dilemma. Please, if you have something that I can do, you can help me. Most of us are now going out there, not knowing what to do or where to go. At least you can find more than 200 of us that would be laid off.

“You know that the economic situation in the country is difficult; and jobs are hard to find. Some of our colleagues have started searching, while others have gotten where to go already,” he said.

Recall that a similar popular supermarket in the mall, Game Store and one of the biggest recently exited the mall.

Also, Filmhouse Cinema, still in Ado Bayero Mall, was shut down due to low patronage and hike in rent.

According to the National Bureau of Statistics (NBS), Nigeria’s unemployment rate dropped from 33.3 per cent to 4.1 per cent; and about 3,567 jobs were lost in the manufacturing sector in the first half of 2023 alone.

Also, an NBS report in November 2022 revealed that 133million Nigerians were poor as the removal of petrol subsidies in the second half of 2023 is believed to have worsened the situation.

Reacting to the development, the management of the mall said it was unhappy with Shoprite’s decision to withdraw its operation in the state.

A statement by the director of the mall, Ike Okeke, noted that the management had moved quickly to invite other investors to fill the vacancy that would be left by Shoprite.

The statement reads, “Over the 10 years that the company operated at the Ado Bayero Mall in Kano, we have enjoyed a cordial relationship.”

He added that it is the responsibility of all investors at the mall to make their business decisions without any interference from the management as it is a normal practice for tenants in all malls around the world to come and go, depending on how their interests are served or otherwise.

Apart from loss of jobs for Kano residents, an economist, Dr Abdulsalam Muhammad Kani said, “The store’s exit will reduce the internally generated revenue (IGR) and Value Added Tax (VAT) of the state.”

Kani, who further said the decision would disrupt business activities at the mall, urged the concerned parties to settle their differences.

Deputy Senate President intervenes 

Owing to the development, the Deputy Senate President, Barau Jibrin, has moved to set machinery in place to halt the planned exit of Shoprite from the state.

A statement by Senator Barau’s Special Adviser on Media and Publicity, Ismail Mudashir, noted that the Deputy President of the Senate would meet with the company’s management this week in Abuja over the matter.

The statement reads, “The Office of the Deputy President of the Senate has set machinery in place to halt the exit of Shoprite from Kano State. 

“Senator Barau I Jibrin, CON, will meet with the management of the company this week, where the issue will be discussed and hopefully resolved.

“Yes, it is a pure business issue, but we will see what we can do to encourage them to rescind their decision and stay in Kano.

“As we all know, there are enormous business opportunities in Kano, the commercial nerve centre of northern Nigeria. At a time when we are scouting for investors, we will not fold our hands and allow them to leave,’’ he said.