French retail giant Carrefour is set to open its first store in the country today, stepping up competition for shoppers in the country’s lucrative but under-developed supermarket industry.
Carrefour —ranked the world’s second-largest supermarket chain after Wal-Mart Stores — will open its maiden Kenyan outlet at The Hub, a new shopping mall located in Nairobi’s upmarket Karen suburb.
It will set up 6,000 square feet of retail space, taking up a fifth of the 30,000 square-feet of the Sh4 billion shopping mall located in Nairobi’s affluent Karen district.
Carrefour’s entry is expected to pose new competition especially to the market leader Nakumatt, which targets similar clientele to the French giant.
“The supermarket space has been dominated by local indigenous players with some small exceptions. The arrival of Groupe Carrefour signals that this cosy market is set to come under pressure. Carrefour is surely targeting the top slice spend and in that regard I think they will be well received,” said the Rich Management CEO Aly Khan Satchu.
Kenya’s formal retail market is dominated by privately-held and family-owned businesses such as Nakumatt, Tuskys and Naivas with only one listed supermarket chain Uchumi.
Second to Nigeria
According to London-based consultancy Oxford Business Group, Kenya is second to South Africa and doubles Nigeria, Africa’s largest economy, in the level of development of formal retail shopping stores.
The growth in shopping malls, says the firm, has been fuelled by demand as the expenditure level for the average Kenyan consumer has risen by as much as 67 per cent in recent years, making Kenya Africa’s fastest-growing retail market.
But while dedicated retail properties and formal retailers are on the rise, the market remains dominated by the traditional, informal sector where 70 per cent of Kenyans do their daily shopping, according to consumer research firm Nielsen.
Carrefour’s two retail stores in Kenya will be operated by Dubai-based Majid Al Futtaim Retail, the exclusive franchise holders for Carrefour in the region.
The Middle East firm is part of the Majid Al Futtaim Group, the family-owned business that acquired troubled motor dealer CMC Holdings in a Sh7.5 billion cash offer in 2014.
The Paris-based supermarket chain is set to become the second global supermarket chain in Kenya’s retail industry after South Africa’s Massmart which opened its Game store last year at the Garden City Mall along the Thika Superhighway.
Carrefour is also eyeing a 100,000-square feet store at Two Rivers, a shopping complex owned by the Nairobi bourse-listed investment firm Centum, this year.
Carrefour has a total of 10,105 stores in 34 countries across Europe, the Middle East, Central Asia, Russia and Africa.
Its total sales grossed Sh9.7 trillion (€84.3 billion) and posted an operating income of Sh252 billion (€2.19 billion) in the year ended December 2013.
Carrefour is seeking to tap into Kenya’s growing “malling” culture fuelled by Kenya’s growing middle class which has increased disposable incomes to splurge on shopping.