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Shoprite Holdings Ltd. (SHP), South Africa’s largest retailer by market value, said it plans to open logistics centers in Angola and Nigeria to reduce the effects of road and port congestion as it expands across Africa.
Sales at Shoprite’s 156 stores outside its home country rose 20 percent in the fiscal year through June, showing that “the principle of distribution centers outside South Africa is a must,” Chief Executive Officer Whitey Basson said in a presentation in Johannesburg.
Warehouses in Luanda, Angola, will be ready before the Christmas holiday in December, and Shoprite will set up a “big distribution center” in Lagos, Nigeria, as soon as it finds a site, Basson said. The Cape Town-based company may take its first steps outside Africa in the event of a “good offer” in India, Brazil or eastern Europe, he said, without elaborating.
Shoprite and local competitors such as Mr Price Group Ltd. (MPC) and Truworths International Holdings Ltd. (TRU) are adding stores across Africa as oil and metal production boosts wealth in the world’s poorest continent. The region’s swelling middle class may boost household spending 63 percent to $1.4 trillion by 2020, according to a report two years ago by New York-based consulting company McKinsey & Co.
More than 78 percent of Shoprite’s sales still come from South African supermarkets, the retailer said in a statement today. At the same time, the “accent on growth in terms of store numbers was particularly strong” outside the country, it said. The retailer opened 21 supermarkets in Africa excluding its home nation in the year through June. Of the company’s top 10 outlets, three are outside South Africa, Basson said.
Store openings this year included outlets in Kinshasa, Democratic Republic of Congo, Shoprite’s first in the country, and in Abuja, Nigeria. The company is looking to add two stores in Abuja, Basson said.
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