French retailer Carrefour is seeking the competition watchdog’s nod to be the sole retail operator at Two Rivers Mall, in an application that if approved could lock out other Kenyan supermarket chains that may be eyeing space in the high-end shopping complex.
The retailer, jointly with the mall owners, have submitted to the Competition Authority of Kenya (CAK) an application for exclusive occupancy over a lease period of seven years.
The Two Rivers Mall in Ruaka, Nairobi County, is backed by listed investment firm Centum. It is billed as the biggest mall in the country, overtaking Garden City upon completion. Carrefour has booked space as the anchor tenant.
“Two Rivers Lifestyle Centre Limited shall not lease to or enter into any similar arrangement with any party for the premises in a centre developed owned or operated by it within a radius of seven-and-a-half kilometres of the centre for the purpose of establishing or conducting the business activity of a hypermarket, supermarket or any other similar business,” CAK said, quoting the agreement between the two parties.
Centum chief executive James Mworia, however, said the agreement only relates to the large hypermarket business and excluded small supermarkets.
“At Two Rivers we’ll still have the small supermarkets like Chandarana,” he said in an interview, adding that the exclusivity for the larger hypermarket space was because Carrefour had shown a lot of commitment by leasing 120,000 square feet.
The agreement points to Carrefour’s attempt to ring-fence its Two Rivers business against stiff competition in the Kenyan retail sector.
By its sheer size and location, Two Rivers is expected to generate considerable business — putting newcomer Carrefour in a firm position to compete with the more established retail brands.
Malls in Kenya have traditionally had one supermarket as the anchor tenant but the bigger Garden City leased space to two retailers, Nakumatt and South Africa’s retailer Massmart, operating through its subsidiary Game.
Mr Mworia did not disclose if Carrefour would pay a premium to have the exclusive retailer rights, terming it as internal commercial affairs.
CAK director-general Wang’ombe Kariuki said this is the first time they have received an application for exclusive rights by a retailer in a mall.
He declined to give any other details, saying it would be prejudicial to the application. The CAK has given 30 days for interested parties to submit their written presentations on the matter.
The agreement between Two Rivers and Carrefour further gives the retailer the undisputed right to display its logo on external signage space as well as have the largest display on the walls.
The Sh25.2 billion Two Rivers Mall was set to be opened in October last year, but this was pushed to this month although Mr Mworia was non-committal on whether this new date would be met.
The mall covers an area of 1.2 million square feet — excluding parking space for 3,000 vehicles — and will have 220 shops.
This is the second aggressive move by Carrefour, which in August last year caused disquiet among suppliers after demanding that they pay a non-refundable deposit fee of Sh1.4 million to do business with it.