A few years ago, Nakumat, Uzumi and Tuskis supermarkets were the kings of Kenya’s retail space. But, now, only Nakuma and Uchumi have closed the shop.
Tuskis is battling a painful farewell to the South African-owned Shabrite supermarket Kenyan market. Why do some supermarkets thrive when others fail?
One reason is poor strategic results for expansion and location. For Shabrite, location was a major obstacle to its development. It was located in the Garden City Mall on Tiga Road, and high-income people rarely go shopping.
Fighting supermarkets keep ordinary items, but most Kenyans prefer kiosks and markets close to their homes. As for Nakumad and Uchumi, they are over-expanding, consuming their property base and making it difficult to pay their suppliers due to slim profit margins. This also happened to Tuscany.
Professional mismanagement is their other soft foundation. Uchumi is a state-owned supermarket and its poor corporate management is common to most government-owned companies.
Nakumat and Tuskis run their business with family members and no professional management. You can learn some lessons from these supermarkets.
Target high- and middle-income consumers compared to low-income people who buy only for necessities, and small quantities from kiosks and “estate-based” supermarkets.
Low-income earners have established relationships with kiosk owners and can borrow from supermarkets.
Family businesses need to train and nurture their successors to avoid mismanagement. Maintaining a good relationship with suppliers is key to the success of every supermarket. Improper suppliers mean poor service to customers. Understanding market needs is important for any business. That is why the South Africans have failed to break the Kenyan market.
What about Quickmart, Carrefour or Chandrana Food Plus? Quickmart is taking advantage of the location to a competitive advantage. Most of its locations are close to customers or easily accessible.
Carrefour has won the hearts of Kenyans by lowering prices. Nivas ’growth is driven by huge sales offers to customers. Kenyans like low prices, but you can’t beat the market based on price alone. You need to understand the customers along with the quality, location, reputation.
-Diana Ombre is a B.Com student at the University of Nairobi.