In 2020, giant South African supermarket chain Pick n Pay opened its first store in Nigeria by partnering with AG Leventis to tap the West African nation’s “underserved” consumer market.
The push into Nigeria came as retailers such as Shoprite Holdings and Mr Price withdrew due to currency devaluations, logistical challenges, and difficulties repatriating profits.
Pick n Pay, which holds a 51% stake in its Nigerian joint venture with AG Leventis, announced its exit as a strategy to focus on its core South African market.
The company said the move was because operational challenges have been increasing in Nigeria, as Techeconomy reported on Monday.
Even with Nigeria’s promising consumer base, these macroeconomic issues have deterred profitability, pushing numerous international businesses to reassess their presence, according to the report.
Pick n Pay CEO Sean Summers announced the store’s decision on Monday, less than five years after the retailer established a presence in Nigeria with two stores.
“Pick n Pay’s departure underlines the difficulties faced by foreign retailers in Nigeria’s tough economic sector. High inflation, currency volatility, and rising costs have corrupted consumer purchasing power and made operations very challenging,” he said.
The announcement follows a series of similar moves by other South African retailers, such as Shoprite, which closed its stores in Abuja and Kano due to an adverse business environment.
Other companies that have joined the foreign exodus from Nigeria have blamed escalating energy prices, foreign exchange restrictions and low consumer demand with high inflation as reasons for their withdrawal.
Nigeria has seen unstable inflation, with rates rising from about 24% to over 34% within the past 18 months. This surge, mainly driven by the increasing cost of food and transportation, has negatively affected consumers and retailers alike.
The naira has depreciated significantly, dropping from around N462/$ to more than N1,500/$, following a government-led forex unification effort to close the gap between official and parallel market rates.
By Staff Reporter
Pictured above: The Pick n Pay store in Lagos now due to close.
Source: Pulse.ng
