Tuskys in distress? How coronavirus has exposed retailer’s soft underbelly

Tuskys Chief Executive Officer Dan Githua, a devoted Twitter user, sometimes acts as the supermarket chain’s last line of defence online. On the app, Githua likes to be known as “anko wa Tuskys” or the “digital retailer” and is quick to respond to critics and clarify the retailer’s position. But for over a week now, his silence online and offline has been conspicuous with the family-owned supermarket chain trending for worrying reasons. In April, Tuskys said it had “temporarily” closed three branches including Digo Road (Mombasa), Kitale Mega and Tom Mboya (Nairobi). Tuskys customers have been complaining about stock-outs while suppliers cry of delayed payments. The East African newspaper reported last week that the government has placed the retailer on its watch list for inability to meet contract obligations with suppliers. The Competition Authority of Kenya (CAK) has also been investigating supermarket chains that have delayed supplier payments and if found guilty, face up to fines of Sh10 million. No doubt, the global Covid-19 pandemic, on the back of an ailing economy, have rattled the retail industry to the core. Amid dwindling footfalls by the day, worsened by restrictions on movement, profit margins have never been thinner. Tuskys says its reeling from the impact of the Covid-19 pandemic, retail experts however say there’s more to what meets the eye with early signs of distress present. Sagaci Research, a provider of African market data and analysis, noted that Tuskys appeared to be in the weakest financial position of any supermarket chain in the country. The firm, in a market report after the closure of the three stores, added that allegations of internal fraud, sibling rivalry, aggressive debt fueled by expansion and fierce competition were taking a toll on the business. “Tuskys appears to be in the weakest financial position of any of the major supermarket chains in Kenya, and if Covid-19 were to claim a victim in chained grocery retail, it would be the most likely candidate,” said the Sagaci Research. “Having expanded rapidly over the past five years, the suspicion is that, like Nakumatt, debt-fueled growth has left Tuskys vulnerable to external shocks.” “Moreover, allegations of internal fraud have dogged the retailer for almost a decade, as members of its factious founding family fight for control of the business, while its market share has come under pressure, particularly in Nairobi, as rivals like Carrefour and Naivas have opened new […]

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