Majid Al Futtaim, the franchise that operates the Carrefour supermarkets in the Middle East, Africa and Asia, has acquired the Shoprite business in Uganda.
Shoprite, the South African retail giant, announced in August this year that it would exit the Ugandan market as well as Madagascar.
On Wednesday, Majid Al Futtaim said it has concluded an agreement with Shoprite Uganda which will see the transfer of Shoprite’s six Uganda store leases to Majid Al Futtaim by end of 2021. The Shoprite stores were at Village mall in Bugolobi, Lugogo Mall, Acacia mall, at Clock Tower and Victoria mall in Entebbe.
Their newest store was set to open at the new Arena Mall in Nsambya.
Majid Al Futtaim launched in the Ugandan market in 2019 with their first Carrefour store at the Oasis Mall. In March this year, Carrefour opened its second store at Metroplex in Naalya.
With this acquisition, Majid Al Futtaim will expand its footprint to eight Carrefour stores, according to a statement released by the Middle East-based conglomerate.
“We welcome the opportunity to bring our unique Carrefour offering of unbeatable value, range, international standards to more customers across Uganda”, Hani Weiss, CEO at Majid Al Futtaim Retail said in a statement.
“Majid Al Futtaim is fully committed to creating great moments for the communities we serve for the long-term. This agreement represents our continued investment in East Africa. We look forward to strengthening our offering in the region and supporting local talent through employment and career development opportunities.”
Both parties will work closely together to ensure a smooth transition of the stores and its operations.
Shoprite’s troubles
Shoprite has been operating in the Ugandan market for the last 21 years. It is set to officially close its operations on September 30.
When it announced its exit this year, it had already closed shop in other markets like Nigeria and Kenya. The company had more than 2,900 outlets in 15 countries by the beginning of the year, including five in Uganda, before quitting four markets now.
In the half-year ended December 2020, Shoprite reported that sales fell 8.4%, or by 784 million Rand (US$ 51.8 million), with Kenya, Uganda and Madagascar contributing about 46 million rand (US$ 3 million) of the drop.
Reuters previously reported that Shoprite had been reviewing its long-term options across Africa over the past year as currency devaluations, lower commodity prices and high inflation have hit household incomes and weighed on earnings.
“In line with the group’s non-RSA review process, our operations in Madagascar and Uganda have been classified as discontinued,” Shoprite announced on August 23, 2021.
Shoprite joins other supermarket retailers like Uchumi, Nakumatt and Tuskys who have also left Uganda.
Some analysts attribute these closures to the small economy that Uganda is, and the small purchasing power that cannot sustain the operational costs that these franchises must contend with. It’s also likely the current Covid pandemic which has affected demand, with majority of the consumers being frugal, could have dealt Shoprite the last blow.
Last month, another retailer, Game Stores which is operated by South African retail giant, Massmart, revealed its plan to sell its stores in Kenya, Uganda and Tanzania
Massmart said it had put up 14 Game stores in East and West Africa for sale, citing a need to focus on its “core strengths” as the group’s losses narrowed during the half-year ended June 2021.
“We have reached the conclusion that the performance and complexity in running the 14 stores in five markets in the East and West Africa is something frankly that we needed to address,” said Massmart chief executive Mitchell Slape.
The stores to be closed are; Nigeria (five), Ghana (four), Kenya (three), Uganda (one), and Tanzania (one).
