UGANDA, Kampala | Real Muloodi News | On August 23rd 2021, Shoprite Uganda, the South African-based supermarket, announced its exit from Uganda and Madagascar. Shoprite accredited its decision to leave the Ugandan market to currency devaluation, lower commodity prices and high inflation.
But what is the impact of such an exit on commercial real estate in Uganda?
Shoprite first entered the Ugandan market 21 years ago. During its reign it opened numerous supermarkets, strategically located within malls in Kampala. Shoprite stores featured prominently in Kampala’s three biggest malls, Acacia Mall Kisementi, Village Mall Bugolobi, Victoria Mall Entebbe and Lugogo Mall (among other branches).
Shoprite provided a new and efficient shopping experience in East Africa, especially in Uganda, where Shoprite was the only consistent foreign supermarket for a long time.
Shoprite was therefore considered an anchor tenant for Uganda. The anchor tenant strategically placed in a shopping centre generates and maximizes consumer traffic for other small retail tenants in the centre. Anchor tenants are usually considered popular departmental stores or major retail chains.
According to Rakesh Reddy, Aparna Constructions, an anchor tenant attracts over 30% of the total foot traffic to a commercial property. Anchor tenants validate the retail space as the best place to do business, and its presence brings prominence to locations and character to the neighbourhood.
Shoprite in Lugogo, for example, provided a complete experience with parking space, security and attracted other retailers such as banks, salons, restaurants and bakeries.
The exit of Shoprite brought uncertainty and confusion among many consumers who visit the supermarket, and current and prospective investors in shopping malls.
Prospective homebuyers and renters usually explore their surroundings when looking to purchase or rent a house. One of the most common things that people look at is proximity to services such as a retail supermarket. Therefore, Shoprite’s departure also affects neighbouring residential properties.
Following the announcement of Shoprite’s exit, Game Stores, managed by South African retail giant Massmart, also announced its exit a week later. Game is also within Lugogo Mall and is looking for a buyer for the Game store.
The uncertainty remains, especially within commercial real estate investors, whether to invest in shopping malls and tenants are in shock with this exit.
However, Emirati billionaire businessman, founder and owner of the Majid Al Futtaim Group, a leading investor in shopping malls, retail, and leisure across the Middle East, Africa, and Asia, has since come to the rescue. The Majid Al Futtaim Group has announced it will take over Shoprite stores by the end of this year. Under the agreement, Carrefour, the investor’s supermarket brand, is all set to take over all of Shoprite’s six stores in Uganda.
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