Nakumatt supermarket at the Junction, Nairobi. Photo/FREDRICK ONYANGO
Retail chain Nakumatt has raised the competition bar for the middle and lower-class market with the opening of its fifth outlet in Nairobi’s Central Business District, pointing to a change in strategy from high-end segment image.
Nakumatt has got a new base on Haile Selassie Avenue, a business hub teeming with office workers and commuters as the battle for the multi-billion shilling window goes a notch higher.
It has taken the battle to the doorsteps of major rivals by opening branches on Moi Avenue and Ronald Ngala Street, so far dominated by Tuskys and Ukwala supermarkets.
The real battle is for the control of the CBD market, which has been dominated by Nakumatt but now faces serious assault from Tuskys and Uchumi who have also strengthened their positions.
Nakumatt managing director Atul Shah, however, says they are out to reclaim lost business resulting from the destruction of the Downtown branch in a fire tragedy early last year and the demolition of another branch on Thika Road to pave way for the expansion of the highway.
“We are now satisfied with the five branches we have opened in the CBD,” said Mr Shah.
“Our new branch on Haile Selassie is offering the right clientele as the area has very many offices and it is a popular drop-off and pick-up point for commuters.”
The branch is Nakumatt’s fifth in the CBD and the 15th in Nairobi. The chain operates 29 outlets across Kenya, Uganda and Rwanda.
The supermarket acquired four branches from Woolmatt, which sold its entire operations to Nakumatt for Sh400 million in March.
Nakumatt’s aggressive expansion comes at a time the supermarket chain has put on ice plans to sell 30 per cent stake to a strategic partner to raise funds for expansion.
The retailer had been in talks with Satya Capital, a London-based private investment firm and Kingdom Holding Company, an investment group associated with the Saudi Arabia royal family to inject about Sh2 billion.
This has now been shelved because none of the potential investors was offering the right price, Nakumatt says.
“We cannot sell it for any price, we wanted to attract the right price, but our situation was not helped by the fire that destroyed our Downtown branch. This reduced our value in the eyes of potential investors” said Mr Shah.
It appears that the inability to get the right investing partner has not dampened Nakumatt’s appetite for expansion.
The supermarket chain has said it is setting sights on Coast region where it plans branches in Changamwe and Malindi.
In the branch expansion, it is believed the retailer has spent over Sh1 billion to put up some high end retail outlets.
A plan to acquire more capital by listing on the Nairobi Stock Exchange was shelved two years ago.
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