Tuskys finally takes over Ukwala stores in consolidation bid

An Ukwala Supermarket outlet on Tom Mboya Street in Nairobi. Tuskys Supermarket has taken over operations of outlets owned by rival Ukwala in Nairobi. Photo/Salaton Njau  Nation Media Group

By EVELYN SITUMA

In Summary

• Kenya’s second-largest retailer is now steering Ukwala stores in the city ahead of a complete rebrand of the outlets.
• Talks about a deal in the offing have been rife since May, but it is only last month that Tuskys moved into the Ukwala stores, according to sources familiar with the transactions.
• Ukwala Supermarkets had three branches and it has trailed rivals Nakumatt, Tuskys, Naivas and Uchumi in expansion. This has seen Ukwala’s market share shrink and dislodged as Kenya’s fourth-largest retailer by Naivas

Tuskys Supermarket has taken over operations of outlets owned by rival Ukwala in a bid to consolidate its business in Nairobi.

Kenya’s second-largest retailer is now steering Ukwala stores in the city ahead of a complete rebrand of the outlets.

However, the Business Daily could not establish whether Tuskys has bought out Ukwala Supermarkets or acquired the outlets and that its rival would continue operating in other locations.

Both retailers refused to comment on the issue, but sales receipts from Ukwala stores in the central business district (CBD) bore the TML (Tusker Mattresses Limited) logo and phone contacts.   

Talks about a deal in the offing have been rife since May, but it is only last month that Tuskys moved into the Ukwala stores, according to sources familiar with the transactions.

“Tuskys started its operation in three Ukwala outlets two weeks ago. They absorbed Ukwala’s permanent staff and let go the temporary workers,” said a source at Tuskys on condition of anonymity.

The three Ukwala outlets operated by Tuskys are Ronald Ngala, Jogoo Road and Tom Mboya branches — cementing Tuskys hold of the central business district where it had nine branches. Nakumatt Supermarkets has four branches while Uchumi and Naivas have two stores each in the city centre.

Ukwala Supermarkets had three branches and it has trailed rivals Nakumatt, Tuskys, Naivas and Uchumi in expansion. This has seen Ukwala’s market share shrink and dislodged as Kenya’s fourth-largest retailer by Naivas.

The Tuskys move could be the second major deal among Kenya’s top retailers in a business that is dominated by family-owned retail chains.

In 2010, Woolmatt sold its entire operations to Nakumatt for undisclosed amount to gain a larger share of the CBD market, which had been hurt following the destruction of its Downtown branch in a fire tragedy in 2009.

READ: Nakumatt intensifies CBD market war

It is also the first major deal involving Tuskys, which has been the subject on an acquisition target.

Tuskys had 48 branches in Kenya by October and reported sales of Sh25.2 billion last year, making it the second-largest retailer based on sales behind Nakumatt.

Players in the market reckon that Tuskys’ moves are informed by the need to consolidate its market share ahead of rivals, especially cash-rich foreign firms that are showing a keen interest for a piece of the Kenyan market.

South Africa’s Massmart has said it will enter the Kenyan market before December next year and is in talks to buy a majority stake in Naivas