Shoprite plans to shut down operations in Madagascar. What does this mean for the retail giant and other foreign businesses in Madagascar?

Earlier this week, Shoprite, Africa’s largest food retailer announced their decision to divest from Madagascar and Uganda. Their communication says: “In line with the group’s non-South Africa review process, our operations in Madagascar and Uganda have been classified as discontinued.”

Although the company reveals that they had an 8.1% increase in total sales for the past 53 weeks ending July 2021, they state that different parameters such as weak consumer spending, inflation, lower commodity prices, and currency volatility led them to end their operations in several countries. They recently exited the Nigerian and Kenyan markets. There is no clear indication on the particular reason(s) why they are leaving Madagascar, but our top two picks would be weak consumer spending and inflation, which somehow, can be related.

Shoprite opened their first store in Madagascar in 2002, and now, the Malagasy customers who used to shop right at their 10 stores (7 in Antananarivo, 1 in Mahajanga, 1 in Toamasina, and 1 in Antsirabe), will have to find new alternatives to do the…right shopping. Presently, these customers have the choice to go to Jumbo Score/Score, Leader Price (except for Antsirabe), Shop Liantsoa (except for Mahajanga and Toamasina), and Supermaki, which, a subsidiary of Jumbo Score, which has the ambition to open 100 stores all over the island.

For this case, the general opinion has a tendency to conclude that Shoprite’s decision was triggered by the Malagasy economic atmosphere. Indeed, foreign companies leave a country when they view that local conditions are no longer suitable for their businesses, and they do it sooner than later. As the business environment in Madagascar today is far from conducive to a flourishing business, some may even argue that Shoprite may not be the only foreign company in this situation and that others have just not made a decision yet.

However, what comes as a surprise is the opening of a Carrefour Market, the French brand, also operated by Jumbo Score Madagascar, of all places, in Fianarantsoa. No one expected that Fianarantsoa would be the first city in Madagascar to have a Carrefour market, but there it is. They opened on August 14, 2021.

The other sad side of the story is the hundreds of workers who will be left jobless, especially during this period of economic downturn. Our hope is that new investor(s) immediately take over Shoprite’s assets so that those who, directly or indirectly, depend on them can continue to earn their incomes and keep on living without troubles. And we really wish that the takeover will be made by Malagasy investors. Shop Liantsoa? Supermarche.mg? Any takers?