Uchumi plays catch-up in battle for shoppers
Posted Wednesday, January 26 2011 at 00:00
Uchumi Supermarkets is back on the expansion trail, a move set to intensify the battle for control of the retail chain market in East Africa.
The supermarket reopened the Nakuru branch and plans to open new outlets in Embakasi, Dar-es-Salaam and Kampala.
“We will open a new branch in Dar-es-Salaam by mid February and two others in Uganda by June this year,” said Jonathan Ciano, the chief executive officer.
The retail chain which closed shop temporarily under the weight of debt following a botched expansion programme in June 2006, is upbeat having returned to the profit zone in 2008.
Uchumi is now playing catch-up as its rivals have expanded over the five years the retail chain has been in recovery mode.
The vacuum created by the collapse of the market leader has seen retail chains open super stores that are changing the local shopping experience.
Having offset most of its debt and backed by financial muscle, Uchumi has the headroom to fend off its well oiled competitors led by Nakumatt, Tuskys, Ukwala and Naivas supermarkets.
The chain is now offering fast foods and snacks in a bid to win new customers, especially the young to match up with Tuskys and Nakumatt which have similar operations.
In its five-year plan, it will open nine branches in Kenya, and five branches in Uganda, Tanzania and Southern Sudan.
The company doubled its profits to Sh865 million in the year ending June 30 last year from Sh420 million in 2009 and it is looking to boost its earnings by increasing sales and stringent cost cutting measures to help rev up trading margins.
“We don’t take pride in branch expansion, but growing customer numbers,” said Mr Ciano.
The rapid expansion is expected to help it increase the number of transactions per month besides raising the basket value or an average spend per customer across its 17 branches.
Customer loyalty is also at the core of the expansion strategy with the introduction of new product ranges through speciality shops and competitive pricing being used as baits for wooing customers to the chain’s floors.
Although Uchumi has made a steady recovery since its near collapse, industry observers say the road ahead looks bumpy as top rivals and second tier players race to build their market share.