Nakumatt to open five more outlets in neighbour countries

Nakumatt Supermarkets will in the next four months open five new stores in neigbouring countries in an expansion drive that will see the retailer spend an estimated $4 million (Sh408 million).

The retail chain is putting final touches to two shops in Tanzania, two in Rwanda and one in Uganda in what is expected to bring its branch count outside Kenya to 20: six in Tanzania, four in Rwanda and 10 in Uganda.

Nakumatt has in recent years stepped up its expansion both at home and in the three neighbouring East African Community (EAC) countries by buying out rivals or setting up new operations.

Opening of the five stores will lift the supermarket chain’s regional store count to 63.

“The first store will be opened this month and we shall progressively launch the rest until they are all operational by the end of May,” said Nakumatt head of strategy and operations Thiagarajan Ramamurthy in an interview.

“The capital investment that we are putting into all five branches will not go beyond $4 million,” he added.

Nakumatt’s new Uganda store will be located in Ntinda, a suburb that is about seven kilometres from Kampala, while the two in Rwanda will be located in and around Kigali.

READ: Nakumatt's profit drops to Sh305m after high costs

In Tanzania the retailer will open one shop within the Dar es Salaam central business district while the other will be in Oyster Bay, an affluent beachfront neighbourhood on the outskirts of the capital city.

Two years ago South African retail chain Shoprite sold its three outlets in Tanzania to Nakumatt in a multi-billion shilling transaction.

Nakumatt in October opened a branch in Kampala, independently taking over the building that housed Shoprite Supermarkets that had closed shop citing poor location.

The Sh120 million worth branch, branded Nakumatt Naalya, raised the supermarkets’ total branch count to 55, with Uganda accounting for nine of these.

Late last year Nakumatt completed the acquisition of three stores belonging to Western-Kenya based retail chain Yako in Busia, Kakamega and Kericho.

Nakumatt managing director Atul Shah has previously cited high potential for growth of retail chains in the region, estimating that the formal retail penetration rate stands at less than 20 per cent.

Tuskys has seven branches in Uganda and 42 in Kenya. Neither Naivas nor Ukwala have a regional presence.

Uchumi Supermarkets last year closed its loss-making Uganda and Tanzania outlets, revealing that the 11 shops it operated in the two countries cost it Sh2.4 billion in cash every year but returned losses for past five years.

The firm was the first local supermarket chain to set up in Uganda.

Uchumi’s former chief executive Jonathan Ciano had before his sacking announced that he planned to open at least 10 new branches across the region.

Nakumatt, Kenya’s largest retailer made a profit of Sh305 million.