The troubles of Uchumi Supermarkets have persisted as rental arrears result in more branch closures. Last month, the retailer’s Koinange branch was closed down after auctioneers carried away with all the stocked products.
In April, the retailer lost its products after Makini auctioneers stormed the Moi Avenue branch in Mombasa over Sh12 million in rent arrears. Additionally, Pambo auctioneers attempted to attack the Uchumi branch at West End Mall in Kisumu due to rent arrears. The situation was settled after the management and the landlord struck a truce.
Uchumi chief executive officer Mohamed Mohamed said:
“As Uchumi works towards ensuring that it continues to optimise its space in the current 12 outlets, some of the branches remain closed as negotiations with landlords continue. Uchumi is working to ensure these negotiations are fast-tracked to ensure branches are reopened.”
Clutching at the Straws?
Despite failing several times, Uchumi Supermarkets is determined to turn things around with several strategies whose success is not guaranteed.
Some of these strategies entail selling of brand equity to an investor, getting rid of huge debts through the sale of assets, and selling the Lang’ata hyper branch to an external firm. The retailer also tried to convert supplier debt to equity but failed.
In addition, different people have been brought onboard to save Uchumi which first went under in 2006. Neither Jonathan Ciano nor the current Jubilee Insurance Bank CEO Julius Kipng’etich succeeded. The retailer is now under the recovery plan of Mohamed, a process that has been derailed by rent arrears, unpaid suppliers, and unpaid workers.
What Next for Uchumi?
The failure of Uchumi and Nakumatt has opened the Kenyan market to foreign retailers, a trend that could see local retail outlets overshadowed. Still, the two cases highlight the serious management issues that supermarkets in Kenya are grappling with.
“Despite the very difficult context we face, Uchumi remains committed to weathering the storm and demonstrating our resilience, ability, and capacity to modify our strategy and adapt to a changing environment – ultimately emerging as a better business,” Mr Mohamed stated earlier this year.
However, only time will tell whether Uchumi will bounce back or not.
