RETAIL BUSINESS

Intervene to save local supermarkets

In Summary

• Most local retailers are credited with crafting innovative ways of supporting local businesses that depend on them for access to the larger Kenyan market

• It would be a pity if the government decides to fold its arms and watch local retailers being pushed out of business by foreign entities

Uchumi Supermarket outlet
Uchumi Supermarket outlet
Image: courtesy

Kenya’s financial health is at risk and could be headed to the doldrums if recent trends in the supermarket sector are anything to go by.

Reports in the local dailies indicate that Ebrahims Supermarket, one of the oldest outlet store in Kenya, would be shutting its doors permanently. This comes hot on the heels of the revelation that Ukwala Supermarket has applied to the courts for the permanent closure of its business by revealing that it is unable to pay its debts.

The negative trend being experienced by supermarkets across the country is too glaring to be ignored. Uchumi is facing financial constraints alongside iconic retailers such as Deacons and Nakumatt. Seeing that the strain is felt across the board, more needs to be done to ensure that these pioneering stores do not go down the drain because they have played an important role in sustaining Kenyan livelihoods.

Most local retailers are credited with crafting innovative ways of supporting local businesses that depend on them for access to the larger Kenyan market. The introduction of locally produced items on Uchumi’s shelves, for instance, changed the way most supermarkets viewed locally produced goods.

By encouraging local businesses to supply it with good quality and well packaged products like omena, vegetables, honey and peanut butter among others, Uchumi supermarket helped in the professionalisation of local suppliers thereby adding value to their products and creating additional revenues for them while granting them access to markets that were previously out of their reach.

The fact that local supermarkets play an important role in sustaining the economy cannot be understated. Most leading supermarkets in Kenya directly employ more than 4500 employees a piece. By extension, the supermarkets indirectly employ thousands more who work as suppliers of various goods sold by the stores and services provided to the supermarkets.

Furthermore, these supermarkets also keep the economy running by borrowing from banks, paying rent to the landlords who host them and paying substantial taxes to the government. Moreover, the government has held shares in some of the local retailers such as Uchumi and has earned revenue from their businesses.

Interestingly enough, the vacuum left behind by troubled local supermarkets is slowly but steadily being filled by foreign supermarkets. The closure of Ukwala Supermarket has seen the entry of Choppies, a company that is listed on  the Botswana and Johannesburg stock exchanges, taking over eight Ukwala outlets across the country.

It would be a pity if the government decides to fold its arms and watch local retailers being pushed out of business by foreign entities. This is more so because the current government has earmarked manufacturing as one of the four pillars of the Big Four agenda. The entry of foreign supermarkets will eventually see the introduction of foreign and imported products edging out locally manufactured products from the market.

Since local supermarkets have established a cordial relationship with local manufacturers by stocking most of their products on their shelves, they need all the support they can get from the government if the manufacturing goal in the government’s Big Four Initiative is to be achieved.

 

The government is on record stating its willingness to support SMEs through the creation of marketing opportunities both in local and international markets. If the government is fully committed to this, it should stop shooting itself in the foot by watching local markets for local products taking the hit. Through proper legislation, negotiated bail-outs and targeted concessions, the government has the ability to reverse the dwindling fortunes being witnessed by supermarket businesses in Kenya.