Drama in the Kenyan Retail Sector

By Soko Directory Team / Published May 24, 2016 | 6:59 am

The Kenyan retail sector is ailing and the economy is feeling the heat with little help coming from the government.

At one point, the Kenyan retail sector was voted as the most formalized sector in Africa but what has now remained is a sector marred with drama, discouragements and low morale among key players in the sector.

All the way from such gigantic retailers as supermarkets down to the small man with a kiosk in the streets, the retail sector is in smokes with a full blown fire being on the way.

The main episode started with Uchumi Supermarket. Uchumi was one of the largest and the oldest retailers in the country. The retailer had branches in Uganda and Tanzania. The once vibrant retailer is now ailing and under economic Intensive Care Unit.

Uchumi sold closed down its outlets in Uganda and Tanzania and did away with some of its openings in Kenya.

The drama kicked off when the retailer entered into a series of loss making. The managers were blamed for cooking profit figures so as to give the public a false outlook of the supermarket and when they they came to reality, things were beyond recovery.

The retailer is now operating under the mercy of creditors. The drama is that the supermarket has been operating under negative capital for some years now. As other work hard to make profits, Uchumi has been working hard to reduce losses. It is said that if all the assets belonging to Uchumi will be sold and creditors paid, the retailer will still be in 200 million shillings debt.

Tuskys Supermarket is now the second largest retailer in the country. It has several branches across the country. It has also has its share of drama concerning some management issues but they have since been resolved and the business is back on its initial path.

Nakumatt Supermarket, the largest retailer has been sailing through the economic waters over the years. The retailer is however, often blamed for inflating prices of its products for making them higher than others. The retailer has however kept it’s business fire burning with very few issues arising from its operations.

Supermarkets in Kenya sell various goods supplied to them by different suppliers. Some of these suppliers are companies and some are entrepreneurs. The supermarkets, however, have gone on record for failing to pay their suppliers on time with Uchumi failing completely to pay their suppliers. This late payments and failure to pay suppliers has had adverse effects on other sectors of economy.

Most of the retail outlets in the country are owned by family. Most of the time they have been embroiled into family disputes that have ended up threatening the corporate image of the business. Tuskys Supermarket is a good example of such a retailer but the issues appears to have been ironed out.

According to economic analysts, the retail sector in the country is ailing despite the fact that it is a key pillar to the economy of the country. Owning a shop is a common phenomenon in Kenya. Shops are all over and people struggle daily to make a living. This being a free market, inflation rates have hit hard on both buyers and sellers and small retailers have always ended up not making any profits unless they hike their prices.

Cash is also an issue that is ailing the retail sector. Many financial institutions are skeptical about giving their finances to retailers as the businesses are often unpredictable and players have just been left with the old tradition of survival for the fittest.

What can be done to restore the drifting glory of the retail sector in Kenya? Is the government of Kenya doing enough to help retailers and ensure that their operations stabilizes to better the economy? Very many questions with very few answers.

Article by Juma Fred.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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