At the peak of their powers, Nakumatt, Uchumi and Tuskys appeared infallible in how they conducted their operations.
They were operating with a swagger that intimidated other retailers until things started to unravel, fast.
The three have floundered and in their place has emerged a new crop of retailers that are expanding rapidly to fill the void left by the erstwhile retail giants. READ MORE
With just Sh140,000, trainee staff breathes life into ailing Tuskys
At the top of the pile is Naivas that now boasts a staggering 75 branches countrywide.
It is followed by Quickmart, formed after a merger of Quickmart and Tumaini Self Service Ltd, backed by Adenia Partners, a Mauritius-based private equity firm operating in sub-Saharan Africa, with 45 branches.
How the two have thrived in an environment where Tuskys and one-time regional giants Nakumatt and Uchumi collapsed spectacularly is a mystery to many.
But industry experts say it boils down to their business models, helped by the determination to learn from the mistakes of the erstwhile market leaders.
Peter Kahi, an insolvency practitioner and partner at PKF, a consulting firm, said Naivas appears to have taken a safer approach not to fall to the mistakes of the three failed retailers.
Mr Kahi said the retailers have also benefited immensely from capital injections by private equity firms.
Last year, the International Finance Corporation (IFC) – a member of the World Bank – private equity firms Amethis and MCB Equity Fund , as well as the German sovereign wealth fund DEG, teamed up to acquire a minority stake in Naivas, helping it raise Sh6 billion.“These retailers got some money from private equity funds, which was a very wise move, which has helped them expand,” he said.Naivas Managing Director David Mukuha said the retailer’s rise to the top has also been helped by avoiding the mistakes of its predecessors.“Nakumatt and Tuskys were big forces when Naivas was still small with two branches in the city (Nairobi). We have been learning from the mistakes that they made. We have seen what they have done and where they fell short, ” said Mr Mukuha.He said one of the biggest reasons Nakumatt, Uchumi and now Tuskys fell from grace was runaway corruption and in the case of the latter family wrangles.“We have also had some (wrangles), which, alongside misuse of funds, had affected operations,” said Mr Mukuha.“They then expanded too fast, and they realised that it was not working […]