Economic hardship: South African retail outlet Pick n Pay runs out of Nigeria

(Punch) South African retailer, Pick n Pay has announced it will exit Nigeria, selling its 51 per cent stake in a joint venture as part of a strategy to restructure operations outside of its home market.

Pick n Pay Chief Executive Officer, Sean Summers, confirmed the exit on Monday, according to Reuters, signaling another major South African player stepping back from Nigeria’s retail sector.

Pick n Pay initially entered Nigeria in 2021 after partnering with A.G. Leventis (Nigeria) in 2016 and operated two stores.

The venture was originally viewed as a step into one of Africa’s largest consumer bases, targeting Nigeria’s underserved grocery retail market.

However, it appears economic challenges, naira volatility, and other regulatory issues may have contributed to making it difficult for the retailer to maintain profitability and expand as envisioned.

Despite this exit, Pick n Pay previously expressed optimism about Nigeria’s long-term potential, citing it as an appealing growth market.

In 2020, Pick n Pay’s Group Executive for Strategy and Corporate Affairs, David North noted that Nigeria’s consumer market remains highly underserved and offers significant potential.

North highlighted that Pick n Pay’s approach differed from other South African retailers, with a focus on smaller neighbourhood stores instead of flagship outlets in large shopping centres, leveraging A.G. Leventis’ local expertise to navigate Nigeria’s regulatory and business environment.

Nonetheless, these efforts have proven insufficient to offset recent operational hurdles.

The economic conditions in Nigeria have also impacted other multinationals, leading to a gradual exodus from the country.

Over recent years, companies across various sectors have opted to leave, citing factors such as currency instability, regulatory obstacles, high import duties, and rising costs of operation.

Companies including Microsoft, Guinness, GlaxoSmithKline and Sanofi are some multinationals that have exited Nigeria or lowered their shareholding in the country.

Retailers such as Woolworths and Truworths are among the South African brands that previously attempted to establish a foothold in Nigeria but eventually withdrew due to similar constraints.

Credit: punchng.com