Editorials

EDITORIAL: Uchumi must rebuild trust, confidence to survive woes

uchumi

Workers restock the Uchumi Capital Centre store on Mombasa Road last December. photo | file

Uchumi Supermarkets #ticker:UCHM failure to pay its workers for three months is just the latest indication of how far the once-iconic retailer has sunk. Its financial troubles seem to run deep despite receiving one government rescue package after the other over the past decade.

So desperate has Uchumi been that it had hinged its hopes on the sale of a Sh3 billion plot in Kasarani, Nairobi, to come through and at least temporarily meet its financial needs, including paying salaries and suppliers.

But the deal has yet to be concluded and so the retailer remains in financial doldrums. Ordinarily a business is not supposed to be run on the basis of selling assets. It is normally the last resort for a struggling company. Firms sell goods and services.

That means  by resorting to selling assets, Uchumi Supermarkets is a business that may be dancing dangerously with death.

It is surprising that Uchumi can fail to pay workers just a couple of months after it received some Sh700 million from the government. That amount seems to have found a hole that was too deep to fill.

READ: Uchumi staff go three months without pay

Obviously the interests of labour did not rank as highly as they should in the use of the money as the company might have decided to pay suppliers first.

Perhaps the retailer should seek to balance the interests of various stakeholders and not spend its limited resources in a manner that keeps workers out of the picture.

No business can run without people – people who are compensated for their effort and skill through regular payment of salaries.

For Uchumi, failing to pay workers is a disastrous position to be in as it only leads to a higher level of shrinkage, which is already a big problem for supermarkets.

It may also be advisable to craft a deal with suppliers that prolongs the payment period especially after they were paid the Sh700 million late last year.

Ultimately what Uchumi needs is a rebuilding of trust and confidence between the retailer and its suppliers – as well as its other creditors and staff – to avoid a situation where a key stakeholder stops dealing with the company as soon as some payments are concluded.

In the meantime, the government must decide whether it wants Uchumi to die or keep it alive with proper support.