In 2018, South Africa’s Shoprite (JSE: SHP) opened its doors in the Kenyan market to strengthen its position in East Africa, however, the retailer is gradually shutting its business in the country.
It has announced plans to close its City Mall branch in Nyali, Mombasa, and job cuts which will affect 115 workers due to the reduced flow of shoppers.
A similar fate happened to its Waterfront, Karen branch in April.
“Endeavour to continue trading at the Nyali branch is no longer viable. Financial and other data will be provided and discussed at a proposed meeting,” Shoprite said in a notice to the Kenya Union of Commercial Food and Allied Workers (KUCFW).
“It is contemplated that the intended date of termination on account of redundancy will be August 31, 2020. There are currently 115 persons employed at the branch of which 92 are members of KUCFW.”
In 2018, Cytonn Investments had said that the retail sector in Mombasa recorded an improvement in performance from 2016 to 2018, in terms of occupancy rates, which increased by 7.2 percent points on average, annually from 82.0 percent to 96.3 percent.
The demand had been spurred by a positive demographic dividend, a growing middle class, the rebound in the tourism sector, and local retailers such as Tuskys and Naivas that had been keen on expanding their national footprint.
The retailer has been left with The Hub, Karen Crossroads, and Galleria, whose sizes are 322,917 SQFT, 85,035 SQFT, and 158,229 SQFT, and were opened in 2016, 2005 and 2011, respectively. In addition, to its branch at Westgate, Garden City mall.
According to Knight Frank’s Half Year 2020 report, the closure can be attributed to “The unfavourable economic conditions and increasing competition has also had a negative impact on certain retailers.”
“The second half of 2020 is anticipated to see a reduced level of activity in the retail market as local and international retailers continue to deal with the adverse effects of the ongoing pandemic on their business, particularly those that deal in non-essential consumer goods.
Footfall is expected to continue rising as the economy gradually reopens, although rental rates are expected to continue their downward trend due to the oversupply of retail centres, unfavourable business climate and adverse economic conditions.”
RELATED
- South African Retailer ShopRite to Sell Majority Stake in Nigeria
- Choppies Enterprises to Exit Kenyan Market in FY2020, One Store Remains
