Tuesday, November 3, 2009

SA group closes more shops, but won’t quit Tanzania market yet

By MIKE MANDE - The East African - Monday, October 26 2009

Shoprite Holdings Ltd of South Africa wants to expand its business in Tanzania despite closing some of its shops in the country due to unprofitability.

Ms Sarita van Wyk, the spokesperson of Shoprite Checkers, told The EastAfrican from South Africa that the group would close its Mayfair Plaza store in Dar es Salaam because it was making losses.

She said that although all the stores in Tanzania performed satisfactorily, the business in the country lacked the critical mass needed to break even.

“During the reporting period, the group closed one of its two smaller stores as it could not accommodate a sufficient level of growth.

“The group’s main supermarket in the new Mlimani Mall in Dar es Salaam benefited from the centre now being fully let and showed strong growth in turnover,” she said.

The company closed a second outlet this year in Tanzania, raising fears among staff that it was about to wind up.

The owner has neither denied nor confirmed the claim.

After closing Slipway store in Dar es Salaam in April, the retailer shut the one at Mayfair Shopping Centre. It had 32 employees.

It becomes the fourth outlet in Tanzania to be closed by the South African company since it started operations in the country in December 2001.

Also closed in the past were outlets on Lumumba Street and at Harbour View Towers, both in Dar es Salaam.

Now Shoprite, whose operations in the country were marred by staff strikes last year, remains with only three stores, two in Dar es Salaam and one in Arusha.

The EastAfrican learnt that the closure of Mayfair supermarket a fortnight ago was necessitated by a reported loss of Tsh70 million($66,667).

This is said to be due to market shrinkage and competition from smuggled goods.

But both the local management of the chain and officials in South Africa have refused to disclose the exact loss, or to comment on the overall performance of the company in Tanzania.

Its general manager for Africa, Gerhard Fritz, said in a brief statement that the management in Tanzania closed Mayfair because it was not making profit.

But he declined to allay fears of imminent closure of the entire business in Tanzania, or to reveal the number of workers who had lost their jobs.

“Shoprite Tanzania has decided to close its non-profitable store situated at Mayfair Shopping Centre. The Shoprite Group stays optimistic about the Tanzania economy and is constantly looking for opportunities to expand its business,” he said.

With the fate of their employment unclear, workers of the Mayfair store have now presented a case of unwarranted retrenchment to the Tanzania Union of Industrial and Commercial Workers (Tuico).

Officials of the union confirmed handling the matter, although the Employment and Labour Relations Act No.6 of 2004 allows the closure of operations by businesses.

A senior Tuico official said they were negotiating the fate of workers with the Shoprite management, which had initially agreed to pay them salaries until the dispute is settled.

During a meeting with Tuico, the general manager of Shoprite Tanzania, Frederich Skein, confirmed that the the Mayfair store made a loss of $66,667.