Uchumi eyes mini-markets, online sales in turnaround plan
Uchumi chief executive Julius Kipng'etich. FILE PHOTO | DIANA NGILA
What you need to know:
The firm will use small branded shops stocking low-volume packed items to target the micro-market as it seeks to regain its foothold in the market.
Uchumi Supermarkets has outlined a strategy aimed at changing its fortunes that includes a shift to a new franchise arrangement with 200 mini shops spread across the country.
Kenya's oldest large retail store - which has been undergoing financial difficulties - will use the small branded shops stocking low-volume packed items to target the micro-market.
Speaking at the firm's annual general meeting (AGM) Wednesday, chief executive Julius Kipng'etich told shareholders that the store will also venture online in order to boost sales.
"There is more traffic in the 'kadogo' economy and this is where money is and we have to be smart enough to tap on this. With almost all Kenyans set to be on smart phones, we expect them to be able to order online just like in other developed markets," Mr Kipng'etich said.
“The old model of expansion was to build shops which added to a fixed cost burden for Uchumi. The franchises we will venture into are partnerships where we will brand and supply our goods through the mini shops. It will not require any significant financial input with the consignment model where the goods belong to the supplier until it is sold,” he added.
The company also said that plans were underway to expand into DR Congo, Nigeria and Ethiopia a few months after pulling out of Uganda and Tanzania aroused sharp criticism from the shareholders.
The firm's board chairperson Catherine Ngahu reassured shareholders that the firm will be cautious in its approach to choosing future expansions to avoid falling into investment pitfalls it has gone through in the past.
“The board shall ensure that in the future, all expansion decisions shall be supported by proper investment appraisals and business cases,” Ms Ngahu said.
The firm, which pulled out of neighbouring Uganda and Tanzania in October citing loss of revenue, now mulls a return in three years when it expects it will have found its financial footing.
