Shoppers at Nakumatt supermarket. The retail chain runs nearly 50 stores in East Africa. Photo/FILE
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It is estimated that the deal, which will see the Kenyan retailer acquire two Dar es Salaam- based Shoprite stores and one outlet in Arusha, will cost Nakumatt Sh4 billion.
Nakumatt will absorb all Shoprite staff in Tanzania to save on hiring and training costs for new employees.
Shoprite was one of the biggest retailers in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets. It is estimated to have about 500 employees.
Nakumatt Holdings is set to complete a buy-out of three Tanzanian outlets of South African retail chain Shoprite in the next four months, managing director Atul Shah has said.
It is estimated that the deal, which will see the Kenyan retailer acquire two Dar es Salaam- based Shoprite stores and one outlet in Arusha, will cost Nakumatt Sh4 billion.
“We have almost finalised the process of acquiring Shoprite and (will) hopefully start operations in three to four months if all goes as planned,’’ said Mr Shah.
He was speaking after receiving Sh600 million payment from Mayfair Insurance Company as compensation for losses suffered in the September terrorist attack at its Westgate Mall branch.
This second payout raises the total compensation by Mayfair to Sh1 billion out of an estimated total loss of Sh2 billion.
Nakumatt will absorb all Shoprite staff in Tanzania to save on hiring and training costs for new employees.
Shoprite was one of the biggest retailers in Tanzania ahead of rivals such as Shreejis Supermarket, Shoppers Supermarket and the high-end Village Supermarkets. It is estimated to have about 500 employees.
‘‘We don’t want job losses and recruiting new staff will not be of any benefit in terms of doing business,’’ said Mr Shah.
The acquisition of Shoprite outlets is set to deepen Nakumatt’s presence in Tanzania where it debuted with a branch in Moshi in 2011.
Shoprite opened its first shop in Tanzania in 2001 and its exit comes a few months after the Tanzanian government warned it against importing the bulk of its products from South Africa.
Shoprite is said to have been importing up to 80 per cent of its products from South Africa, which did not sit well with the Tanzanian government.
Nakumatt is said to have made plans to buy its products from both Tanzanian manufacturers and Kenyan distributors based in Tanzania.
Both Kenya and Tanzania belong to the East Africa Community (EAC) common market which has signed a protocol for free flow of goods, capital and labour.
Nakumatt runs nearly 50 stores in East Africa including Rwanda and Uganda. It has crafted expansion plans to venture into more African markets in the medium term. Mr Shah said in an interview with the Financial Times last year that the retail store is valued at about Sh34 billion.
It has an annual turnover of about Sh55.3 billion ($650 million), compared to Uchumi’s yearly sales of Sh14.36 billion. The target markets under the plan that should see the company transform into a Pan African retailer include Burundi, Zambia, South Sudan, DRC, Nigeria, Botswana and Malawi.
Kenya’s second biggest retailer, Tuskys, has a presence in Uganda.
Uchumi Supermarkets, which is estimated to be Kenya’s third-largest retailer, also has a regional presence with outlets in Uganda and Tanzania besides cross-listing at the Kigali Securities Exchange in Rwanda.
Mr Shah told the Business Daily that Nakumatt had for the time being put on ice plans for another buyout after the Shoprite deal, but will instead champion the growth of the newly acquired outlets to enable expansion.
“We are currently laying strategies on how we can improve Nakumatt as a brand but not more acquisitions,’’ added Mr Shah.
He was non-committal on whether they will retain the Shoprite tag or whether they will rebrand it to Nakumatt.
“We will give more details in a month or so. I’m not in a position to divulge more but I can assure you that we will be operating soon,’’ said Mr Shah.
