Following financial difficulties that forced the retailer to restructure its business, Shoprite Nigeria plans to open standalone neighborhood stores as part of efforts to revitalize its operations.

Adekunle Adebiyi, the Executive Director, Investments at MBO Capital Management Limited, an investor in Shoprite Nigeria, revealed this. He talked about the supermarket chain's financial difficulties and plans for recovery.

Three Shoprite locations have reopened, according to Adebiyi, following the company's temporary closure to negotiate with suppliers and settle outstanding debts.

“We took a very, very drastic decision to just shut everything down whilst we negotiated with suppliers. Now three stores are back open,” he said.

He clarified that instead of depending mostly on big shopping centers, the company intended to grow through smaller standalone stores in residential areas.

“We’re going to be opening standalone neighbourhood stores, which was always the plan,” Adebiyi said.

Instead of investing a significant amount of money in real estate development, the strategy is anticipated to enable the retailer to focus its resources on supermarket operations.

According to Adebiyi, supermarkets usually run out of leased space and make investments in equipment like refrigeration systems and shelves.

He did point out that in Nigeria, where banks frequently demand physical assets as collateral for loans, this business model might make financing challenging.

He revealed that during the acquisition of Shoprite Nigeria, MBO Capital had trouble obtaining bank financing since lenders were unable to find enough tangible assets to back the deal.

The retailer's business structure made it challenging to secure traditional asset-backed financing, even though it generated billions of naira in revenue. As a result, investors looked into other funding options.