Exit of multinationals slows retail growth

A woman walks into a branch of Shoprite before it closed its operations. The exit of Shoprite had an immediate effect on general food and grocery traders.  PHOTO | EDGAR R. BATTE 

What you need to know:

  • The retail sector has continued to record varied results, with the service and fashion retailers recording single digit growth in 2021 compared to 2019 numbers.

The exit of multinational retailers from the Ugandan market left a huge vacuum in retail trade last year according to Knight Frank Uganda. 

The second half of 2021 saw Shoprite, a multinational retailer across Africa, exit the Ugandan market on the back of a sale to Majid al Futtaim trading as Carrefour.

The closure of Shoprite and its final exit, further negatively impacted any incremental recovery in turnover and  a drop in foot traffic growth in terms of customers visiting retail stores which had slowly picked up after the 2020 disruptions.

Impact 

The impact of the exit captured in a Knight Frank real estate market  performance report shows it had an immediate effect on general food and grocery traders who were negatively hampered during subsequent six-week closure for the rebranding exercise.

The retail sector has continued to record varied results, with the service and fashion retailers recording single digit growth in 2021 compared to 2019 numbers.

The restaurant sector was the worst affected with negative growth of approximately 38 percent, impacted by the loss of dinner trade and the continued closure of entertainment facilities such as kids playrooms and cinemas.

Supermarket occupancy drops

Supermarkets recorded a three percent year-on-year decline during the period, and a further 20 percent decline compared to the same period in 2019.

However, occupancy levels have fortunately remained stable due to further stimulus packages offered by landlords to ensure sustainability of trade in the long term.

The highlight of the second half of 2021 was the expansion of food retailer Carrefour, with the successful opening of four additional stores, and the anticipated opening of their seventh store in the Arena Mall in early January 2022. 

“This bodes well for international investor confidence and will most likely lead to new international entrants into the retail market,” Marc Du Toit, the head of retail at Knight, said. 

Knight Frank projects the retail property market is expecting a general improvement in activity this year, albeit slowly, hinged on, most of the population getting vaccinated, and all existing Covid-19 restrictions lifted as proposed.

With regards to retail, Mr Marc forecasts increased activity in the food and entertainment industry as people celebrate and maximise the freedom from curfew. However, this may not be enough to make up for lost time and earnings.

“We may see continued strain on retailers come to a head because of lifting of the rent rebates offered throughout most of 2021,” Marc said with caution.

Outlook        

With regards to retail, Mr Marc forecasts increased activity in the food and entertainment industry as people celebrate and maximise the freedom from curfew. However, this may not be enough to make up for lost time and earnings. 

“We may see continued strain on retailers come to a head because of lifting of the rent rebates offered throughout most of 2021,” Marc said with caution.


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