Empty shelves inside Nakumatt's Kisumu County branch on November 26, 2019. PHOTO | FILE | NATION MEDIA GROUP
There is a programme on CNN called Club100. Hosted by Ciryl
Vanier, the programme tells the story of brands that have been in
business for 100 years or more.
Vanier
interrogates how these entities have survived the vagaries of time to
not only remain firmly in operation, but also to define consumption
habits across the world and even become part of popular culture.
These brands have a common denominator: they are all defined by resilience.
COLLAPSE
The
story of supermarket business in Kenya is a tragic paradox. While some
retailers collapse under the weight of enormous debts, lack of stock and
unpaid salaries, others, ironically, seem to be living their best days,
opening up branches all over the country in quick succession.
Nakumatt,
Uchumi, decades-long Ebrahims and Ukwala brands have defined Kenya’s
shopping culture for many years. Today, all of them have left the stage
in a painful story of mismanagement, debt and others looting.
Joining them recently was Botswana-owned Choppies who are set to exit the local market after five years of operations.
The
closure of these businesses almost always follows the same pattern:
empty shelves, unpaid suppliers, bulging rent arrears and massive
layoffs.
Employees who remain are
demoralised for having to turn customers away, and for going for months
without pay. Before the business snaps.
With
Naivas, Carrefour and Shoprite now running the roost in the local
retail business, the supermarket landscape in Kenya is not what it used
to be.
Even to Kenyans, the dramatic
transformation of the scene has been difficult to fathom, with the
subject forming part of a vibrant discourse on social media.
CHANGING SCENES
A Twitter user recently tweeted:
‘‘How we moved from Nakumatt and Uchumi to Naivas, Carrefour and Shoprite is beyond me.’’
The
tweet captures the sentiments of millions of other Kenyans who have
watched the brands fall through the trapdoor in the most embarrassing
fashion.
Ebrahim’s Supermarket had
for many years endeared itself to Kenyans who know Nairobi’s shopping
scene well. The shoppers had a secret: if you couldn’t get a certain
item in all the other shopping stores, chances are Ebrahim’s would have
it in stock. And it hardly disappointed them. After all, the store had
been in business for 75 years, the longest for a supermarket in Kenya’s
history.
This is another heartrending
story of Kenya’s oldest supermarket, which closed its doors earlier
this year after serving city residents and visitors from 1944, 19 years
before Kenya gained independence.
In
its glorious days, the iconic Ebrahim’s, etched at the intersection of
Moi and Kenyatta avenues, served not only as a shopping store but also
as an important landmark in the city.
While
the owner Mr Ebrahim Nurali, 90, was tongue-tied as to what stole the
roar from the once vibrant supermarket, a source revealed to the Nation
that managers and some employees had for years colluded to fleece the
family business, driving it into insolvency.
Ten
months later, Ebrahim’s former home is not recognisable anymore. The
space has undergone a complete makeover of glass partitioning, with
small boutiques, electronic and perfume shops now operating.
Like
many other Kenyans, Martin Mwongela grew up imagining that Nakumatt was
the synonym for supermarket shopping. The collapse of the business has
had a sentimental effect on him.
Peter Wachira though was blunt in his analysis of Nakumatt’s woes. He tweeted:
‘‘One day you are the cock of the crow and the next the feather duster.’’
Talking
of the cock of the crow, in its heyday, Nakumatt was head and shoulders
the region’s retail kingpin. Nakumatt controlled 62 stores across the
East African region, employed more than 6,500 and made profits by the
tens of billions.
CREDITORS
From
2016, Kenyans have watched helplessly as Nakumatt went to its knees.
Creditors were on its neck, suppliers refused to deliver more goods
owing to a large debt.
From this
moment on, the retailer would close branch after branch, laying off
staff before being embarrassingly kicked out by landlords for rent
arrears.
In a space of three years,
the retailer has shut outlet after outlet in the region, keeping doors
of only six of its branch open, albeit painfully.
Not even the appointment of an administrator in Peter Kahi to resuscitate the business could keep it from sinking.
With
the six branches vanished, Nakumatt is now likely to be completely out
of operations by the end of this year. This time for good.
This
devastating tumble has stricken stroke a nerve of sympathy among
Kenyans and East Africans. Few would have thought a 32-year era would
end in this heartrending manner.
When Choppies ventured into the Kenyan market five years ago, it had hoped to capitalise on the exit of Ukwala and Nakumatt.
The
game plan of the Botswana-owned store with outlets across East and
South Africa though failed to materialise after Kenyan shoppers stuck to
traditional local brands namely Naivas and Tuskys.
The stay of Choppies in the Kenyan market has been a mixed bag.
Back
at home, the brand was delisted from the Johannesburg and Botswana
bourses after failing to make public its financial results in June 2018.
After
failing to pay suppliers and salaries of its employees amid piling rent
arrears, Choppies was forced out of Kenya few weeks ago.
Its
Kenyan human resources manager Joshua Were said in September they were
in talks to negotiate compensation modalities for their employees.
When
the commercial court reconvenes on March 14 2020, the directors of
Ukwala Supermarket will be crossing their fingers that Justice Mary
Kasango grants their application to liquidate the once vibrant shopping
store in Kenya.
TAX ARREARS
Bogged
down by unsustainable debts, the store applied to be allowed to fold in
November, bringing to a close its 24-year operations.
Like
other stores that have gown down this dreadful route, the supermarket
owed Kenya Revenue Authority, banks, suppliers and was unable to pay
salaries to its employees.
With a
debt of Sh840 million in tax arrears, KRA will be the single biggest
loser when Ukwala, which owes a further Sh930 million to creditors, goes
down.
With a measly asset value of
Sh19.3 million, it became practically impossible for Ukwala to stay in
business. But even as its branches countrywide shut down, the Eldoret
outlet remained resilient, standing its ground to fight to the bitter
end of what was clearly a losing battle.
In
a tragic turn of events, employees of the branch only learnt of the
owners’ intent to shut down the loss-making store a day before its
closure. The branch had taken a crushing blow, and threw in the towel.
The
survival of the soul of government-owned Uchumi Supermarket is
currently hinged on the success of a Collective Bargaining Agreement
(CBA).
In this plan, creditors will
take a 70 cut of the money owed by Uchumi to allow it to recover from
its financial whirlpool. Should the CBA backfire, Uchumi, currently in
the ICU, will have breathed its last.
Once
the poster boy of retail success, Uchumi attracted leaders from Africa
for a benchmarking mission, and was also the first retailer in the
region to be listed in the Nairobi bourse.
Long
before Nakumatt had established its dominance, Uchumi was the symbol of
budget shopping among Kenyans from all walks of life.
But
from the time the rain of corruption, orgy of looting and mismanagement
started beating the store, things were never the same again. First
Uchumi was delisted from Nairobi Securities Exchange, before it shut
down benches as it hurtled down to its waterloo.
Like
most state corporations in financial headwinds, the government has
bailed the ailing supermarket to the tune of Sh1.8 billion, effectively
making it a cash cow, even as its CEO Mohamed Mohamed denies it.
Even with the bailout, the retailer’s recovery has been hampered by its Sh3.6 billion debt owed to suppliers and lenders.
CEO
after CEO, appointed to rescue the business, has come and left the
retailer in its wobbly state, if not worse. Now its fate lies in the
hands of others.
Kenyan businesses, especially consumer businesses, might have a leaf to borrow from members of Club100.
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