Struggling retailer, Nakumatt Supermarkets has announced that it is undertaking a business restructuring exercise which will lead to closure of several unprofitable branches across Kenya and Uganda.
The retailer says this is part of a cost cutting strategy aimed at reducing its total cost base by up to Kshs 1.5 billion annually and streamline most of its operations.
According to Nakumatt Holdings Managing Director, Atul Shah, the company has began a new strategy that has been developed to provide a recovery platform for the firm and replaces the Nakumatt 2.0 strategy which had been developed in 2010 amidst an optimistic economic climate with the domestic economy (KENYA) enjoying a 5.6% growth rate and a 4.1% inflation rate.
“All indicators then, had pointed to a 10% growth rate by 2016 with the growth rates and inflation now at 5.8% and 6.3% respectively, according to the recently released Economic Survey 2017.” said the company in a statement.
Slow Moving items Will No Longer Be Sold
In order to cut costs, Shah said the firm reducing its store keeping unit (SKU) exposure by retaining frequently purchased items and delisting slow moving products.
“The branch culling strategy will start off with sub optimally performing branches for whose leases contracts are due for renewal to be followed by branches in poor locations,” shah explained, adding that, “We have also embarked on a shelf stocks optimisation programme to enable us retain a lean variety of profitable retail products.”
Nakumatt Haile Selassie Shut Down
Shah also confirmed that plans are underway to revert the struggling Nakumatt Haile Selassie branch located at KU Plaza, back to Kenyatta University, by the end of this month; at the expiry of the current lease.
The closure of Nakumatt Haile Selassie will be the third closure to be undertaken by the retailer in recent months following similar developments at its former Nakumatt Ronald Ngala and Nakumatt Katwe in Nairobi CBD and Kampala, Uganda respectively.
Freezes Hiring of New Employees
Nakumatt has also freezed on new staff signings, saying they are “opting to absorb and progressively deploy staff from recently closed branches to its existing and upcoming outlets.”
“All the employees previously assigned to work at Nakumatt Ronald Ngala have already been absorbed at other Nairobi branches. Staff members currently serving at Nakumatt Haile Selassie, will be absorbed at other Nakumat branches ahead of their re-deployment to upcoming branches including, Nakumatt Embakasi at the new Southfield Mall.” it said in a statement.