Stiff competition drives Bata rival out of Kenyan market

Pakistani Shoe Company, Servis, is set to exit Kenya’s retail market after opening shop in 2010 with the aim of reducing the dominance of Bata in the region’s footwear market.

The Servis Group—which is listed on the Karachi Stock Exchange—has ceded its Kenyan shops to Kwanza Shoes, a new firm that will officially set up next week.

Servis had planned to open a manufacturing plant in 2013 and was selling school shoes, canvas, Cheetah boots and slippers, which are Bata’s flagship products. Sources familiar with the firm cite poor sales for the exit, paving way for Kwanza to take over the shops that were strategically placed near Bata outlets.

“We bought the remaining stock from Servis and we will continue selling it until we bring in our own products,” said Raj Srungarapu, a director of Nairobi Business Ventures Limited, the owners of the Kwanza brand.

Kwanza will open a new branch in Village Market and acquire Servis outlets in Ongata Rongai, Kenyatta Avenue and Moi Avenue—all in Nairobi.
Servis was betting on pricing to capture market share, but it seems Bata, which enjoys a near monopoly in East Africa, expansion and rollout of new models threw the Pakistani firm into disarray.

Servis’ Cheetah boots resembled Bata’s Safari boots—one of the few Kenya-made products sold in international markets. The Cheetah boots were retailing at Sh1, 899 while the Safari boot is going for Sh2, 199—a signal that the firm was keen to engage Bata is pricing war.

The company had also planned to open a manufacturing plant to allow it offer competitive prices since it has been paying an import duty of 25 per cent to feed the regional market from its Pakistani factories

The firm had struck franchise pacts with about 40 dealers, top among them being the Tuskys Supermarket chain in what was seen as response to Bata’s shops in Nakumatt and Uchumi supermarkets.

Servis executives refused to give details on their exit from Kenya.

“We decided to change our business model,” said Mr Salman Basharat, Servis Africa’s chief operating officer. “I am, however, not at liberty to discuss the details at the moment.”

The Pakistani company’s exit from Kenya comes at moment when the East African shoe market has witnessed reduced demand, prompting manufacturers to cut production.

“The number of leather shoes produced in 2011 declined by 12.2 per cent after registering growth for three years in a row,” says Kenya’s 2012 Economic Survey.

The reduced demand has seen Bata seek ways to attract the sophisticated consumers with launch of trendy products.