News24
04 Aug 2020, 11:42 GMT+10
Qongqo said South African companies overestimated their capabilities and attractiveness of their product offerings moving into the Nigerian market and forgot different countries have different cultures and tastes because the strategy that worked in South Africa might not work in Nigeria.
"Companies do not do enough due diligence. Taking your same offering and going out of the country selling it at the same price point is not going to work. The thinking that people should aspire to shop our product is damaging. Even though the Nigerian economy is big and growing fast, which is usually the selling point, the GDP per capita is so low," she added.
Vianello said the culture in Nigeria was different as "people still prefer to buy from street vendors. The most difficult problem they have is the lines of communication. They have a massive but skewed population compared to SA between lower-income and upper-income earners".
He added the strategy Shoprite used to enter the Nigerian market was to appeal to the higher-end customer, but this proved challenging when they had to expand.
"They had to roll out stores in 'mainstream Nigeria' which is not Lagos or Abuja but all the other cities of the lower-end resident who earns a low salary. The average Nigerian cannot afford luxury items sold at Shoprite."
Distribution in Nigeria was also a problem that might have contributed to Shoprite discontinuing its operations, said Vianello.
"Distribution is near impossible, with being far away and the problems in landing goods at the port, the bribery that takes place with payment of duties. I think that Engelbrecht has just decided that he does not need it. There are more opportunities in SA than Nigeria and that's why he is doing it."
Qongqo said this was the right move for Shoprite "because if you can't grow to the extent that you can get to critical mass and operate profitably in a sustainable manner then it makes for a poor investment".
South African retailers have struggled in the Nigeria market. This exit follows the recent retreat of Mr Price which exited the country after Truworths pulled out as well.
"The market is tough out there especially the Nigerian market which needs Nigerians who understand it, you have to have the courage to admit when you've lost and I think this is it. It would continue to hurt pensioners if they chose to stay there indefinitely just out of pride," said Qongqo.
Group sales rose by 6.4% to about R156.9 billion in the 52 weeks to June 28, the group said in a trading update. As a result of the lockdown, customer visits declined by 7.4%, while the average basket spend increased by 18.4%.
However, international supermarkets (excluding Nigeria) contributed 11.6% to group sales, and reported a 1.4% decline in sales from 2018. South African operations contributed 78% of overall sales and saw 8.7% rise for the year.
Get a daily dose of Kenya Star news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Kenya Star.
More InformationLondon [UK] June 12 (ANI): David Bedingham's solid innings powered South Africa to 121/5 at the end of the first session of Day 2,...
CHANGSHA, June 12 (Xinhua) -- The fourth China-Africa Economic and Trade Expo opened on Thursday in the central Chinese city of Changsha,...
Marseille [France], June 12 (ANI): The inaugural edition of Raisina Mediterranean is set to take place in Marseille on June 12 and...
London [UK], June 12 (ANI): Former Australian captain Ricky Ponting lauded South African pacer Kagiso Rabada for his five-wicket haul...
DUBAI, 12th June 2025 (WAM) -- Rashid Abdulla Al Qaseer, Deputy Director of MoFA's Dubai Office, met with Isabel Paula do Castro, Consul...
As the world marked the first International Day for Dialogue among Civilizations on Thursday, calls for mutual respect, inclusive development...
WEST JERUSALEM, Israel - The Israel Air Force has launched a pre-emptive Pearl Harbour style air raid over Iran, dropping bombs over...
NEW DELHI, India - The world is in shock following Thursday's devastating plane crash in India which has killed at least 290 people,...
CO ANTRIM, Northern Ireland: Hundreds of masked rioters attacked police and set houses and cars on fire in the town of Ballymena, in...
Russia and North Korea have signed an agreement to enhance cooperation, including language centers and joint events Russia and North...
As the world marked the first International Day for Dialogue among Civilizations on Thursday, calls for mutual respect, inclusive development...
Gaya (Bihar) [India], June 12 (ANI): Union Minister of State Home Affairs Nityanand Rai on Thursday addressed a press Conference on...