Kenya’s supermarket sector has over the recent past faced numerous challenges.
The figures paint a gloomy picture. In a short time, the branches have shrunk from 314 to 189, with big retailers such as Nakumatt, Tuskys and Uchumi the biggest losers.
But it is not all gloom and doom as Naivas and Quickmart have capitalised on the weaknesses of the fallen giants to expand and woo shoppers. Naivas has been leading an aggressive expansion plan, taking up retail spaces they have left behind.
But overall, the sector appears to be under siege. While a total of 125 branches have been closed, only 13 new outlets opened in 2020 and just seven more are projected to be opened in the near future, according Cytonn’s latest research on supermarkets in Kenya conducted in October.
The financial constraints due to mounting rental arrears and suppliers’ debts have seen Nakumatt, once Kenya’s largest supermarket chains, lead from behind with closure of all its 65 branches.
Uchumi, Choppies and Nakumatt follow with 33, 13 and 10 closed branches respectively. South Africa’s giant chain, Shoprite that entered into local market in 2018, closed all its four branches, citing the underperformance of its supermarkets.
Tuskys has also been rapidly shutting down its branches due to mounting rent arrears and supplier debts.
“The recent closure of its outlets indicates recurrent financial woes and hence the need to mobilise more funds to stabilize its operations and ease the financial pressure,” the Cytonn market report says of Tuskys.
“The closure emphasizes the ongoing financial constrains by the retailer due to strained revenues.”
The Kenya Union of Commercial Food and Allied Workers (KUCFAW) has called for government intervention to rein in a sector that continues to grapple with mismanagement, corporate governance issues, and delayed payments to suppliers and workers.
Experts say the high number of closed outlets indicates a market share that remains to be exploited if players can put their recurrent financial woes in order.Naivas projects its number of branches to increase to 70 from current 66. So far, the family-run retailer has opened five more branches in 2020 and expected to open four more to its thriving stable.The plans to open four new retail stores to be located at Lifestyle mall in Nairobi’s CBD, Rongai, and two other undisclosed locations, have seen the ambitious retailer mainly take up spaces left behind by struggling ones, breathing a fresh air into the struggling yet prospective sector.French supermarket chain, Carrefour is […]