South African supermarket operator, Pick n Pay, plans to expand into Nigeria next year through a partnership with a local conglomerate, as it seeks to reduce its reliance on its home market, it said on Tuesday.
The venture will provide stiff opposition to another South African supermarket chain, Shoprite, which is the biggest operator in the West African country at the moment.
Pick n Pay already operates in Botswana, Zimbabwe and Namibia and plans to open new stores in Ghana next year. Like many other South African companies it wants to expand further across the continent amid sluggish economic growth at home.
The retailer, which reported a 26 percent jump in annual earnings on Tuesday, said it would take a 51 percent stake in a Nigerian joint venture with conglomerate A.G. Leventis, which runs a food business. It did not disclose the size of the investment.
“We are not suddenly going to explode onto the scene in Nigeria next year but we are going to start the process of looking at all those things,” Pick n Pay’s CEO Richard Brasher told a results briefing, adding that he was aware of tough trading conditions in Nigeria and would not expand hastily.
Nigeria is Africa’s biggest economy but some South African companies that expanded into the country, including Dairy products maker Clover Industries and fashion retailer Truworths, have either pulled out or scaled down due to a scarcity of hard currency to import spare parts and raw materials.
Brasher said Pick n Pay was taking a long-term view of Africa’s most populous nation.
“If you’re in the retail business and you are an African business it’s hard to ignore Nigeria,” he told Reuters.
Pick n Pay has lost ground in South Africa to rivals such as market leader Shoprite, after failing to invest in new stores. But Brasher, a former UK head of Tesco who took over in January 2013, is implementing a plan to win back market share.
