Shoppers outside a Shoprite outlet in Kano, northern Nigeria. AFP FILE PHOTO | AMINU ABUBAKAR
The failure by struggling supermarket chain Nakumatt to pay its
landlords $5.9 million in rent arrears could provide the opportunity
international retail giants have been waiting for to enter the regional
retail space or boost their presence here.
This past
week, in an interview with Bloomberg, Shoprite’s director Gerhard Fritz
said the retailer is in talks with nine of Nakumatt’s landlords as it
seeks to open its first store in Kenya.
“Taking over
vacated outlets would be the preferred way to enter East Africa’s
largest economy as the retail market in Kenya is well established to
build new stores,” said Mr Fritz, adding that the plans include taking
over two sites in Uganda.
However the retailer, valued
at $8.5 billion, said it has no plans of re-entering the Tanzanian
market that it exited in 2004, nor entering the Rwandan retail space.
Botswana-based
Choppies has also announced plans to increase its stores in Kenya from
the current 11 over the next three years, but does not plan to take over
leases from Nakumatt.
“We are looking at 20 to 25 new stores in the next three years,” said Choppies chief executive. Ramachandran Ottapathu.
If
successful, Shoprite’s move would be a major step in its expansion
outside South Africa. The retail chain boasts more than 2,600 stores
spread across 15 countries on the continent.
Shoprite
is also banking on its acquisition, through a controlling stake in
Steinhoff Africa Retail (STAR) in September, which already has
operations in Kenya and Uganda, to make its expansion into this market a
smooth venture.
According to its website, STAR deals
in a wide range of products including clothing, footwear and home ware,
furniture, electronics and appliances, consumer goods, mobile phone
handsets and data.
Strategic space
Nakumatt
has in recent times lost strategic space in rent arrears disputes with
landlords including Thika Road Mall ($518,000) and Junction Mall in
Nairobi; Prestige Plaza ($1.15 million), Galleria Mall ($984,000) and
Ukay Centre ($609,000) — all of which are considered prime retail space
properties.
On Monday, Nakumatt filed for
administration in a bid to ward off liquidation attempts by its
creditors who are seeking close to $400 million.
Nakumatt is hoping the administration order will enable it to achieve a better outcome for its creditors.
“Tusker
Mattresses Ltd [Tuskys] has, subject to the Competition Authority of
Kenya’s approval, undertaken to go ahead with its investment in
Nakumatt. The decision to apply for an administration order was a
difficult and complex one that was carefully considered,” Nakumatt said,
adding that it was apprehensive that in the absence of an
administration order, there was a significant danger of its being wound
up.
Tuskys, has already offered to inject $6.5 million
into the troubled retail chain to cater for employees’ salaries, rent
and debt payment guarantees of up to $30 million for the close to $400
million outstanding debt.
Outside of Kenya, the
retailer owes more than $0.7 million to Tanzanian landlords and
suppliers and is also facing similar demands in Uganda, with the matter
already in the courts in Kampala.
No comments :
Post a Comment