Foreign firms Fill Kenya’s Retail Market Gap

Shoprite Holdings, a South African supermarket chain, is taking advantage of the financial demise large Kenyan supermarkets are facing.

Shoprite’s CEO, Pieter Engelbrecht said five years ago, penetrating the Kenyan retail market was difficult as there were already 3 very big retailers. However, the supermarket has now found a chance thanks to Nakumatt’s collapse, which has led to the closure of its branches. Recently, Westgate Mall has signed Shoprite as its anchor tenant after Nakumatt exited the mall.

“Expansion in Africa continues with a planned entry into Kenya before the end of 2018, where weakened competitor positions have opened a window of opportunity to strengthen the group’s presence in East Africa,” Engelbrecht said. Shoprite also said it opened 158 new outlets in 2017 across 14 countries. These new outlets have created 4,254 jobs.

On the other hand, Carrefour, a French hypermarket, has also filled Nakumatt’s space at the Thika Road Mall (TRM) and at The Junction. Carrefour is also set to open another branch at Sarit Centre.

However, as these foreign retailers thrive where others once succeeded then failed, one cannot help but wonder if the same fate will follow them. For instance, it is claimed that Nakumatt’s problems are partly politically influenced. Therefore, will foreign retailers cushion these influences as well?

Furthermore, as relevant regulators allow foreigners to enter the Kenyan retail market, one cannot help but be concerned. We already have local retailers that could be promoted to perform well here and regionally. Currently, Nakumatt and Uchumi are restructuring themselves with the hopes of gaining back what they have lost. Nevertheless, the market might be saturated with foreign retailers by the time they fully get back on their feet.