Local Retailers Welcome Move Not to Protect Carrefour From Competition

Kenyan local retailers have welcomed the Competition Authority of Kenya (CAK) move in rejecting French retail giant Carrefour application that sought protection from competition.

“Aggressive entry of foreign retailers will impact local manufacturing worse off than will local retailers. Good decision CAK,” said  Dan Githua, Chief Executive Officer Tuskys Supermarket in a Tweet.

“It is also, not clear why a player would want to be protected from local competition. Local retailers have been making an investment for decades, have not asked for protection,” he added.

Githua noted that “If you go to these foreign supermarkets. You will find imported basic products. Jam, cheese, chutney, fruit, sausages, frozen cereals etc. We would be better selling our own. Actually, the main reason US supports Wallmart, UK Tesco, and FR Carrefour is so they can support their manufacturing by exporting to other countries.”

Through an application to the Competition Authority of Kenya (CAK), Majid Al Futtaim, the Carrefour franchise holder in Kenya, had sought for exclusive rights of occupancy submitted jointly with Two Rivers Mall owners.

The Two Rivers Mall owners include Two Rivers Development Limited with a 50.0 percent shareholding and OMP Africa Investment Company with the other 50.0 percent shareholding.

In the application, “…the parties propose that the lessor shall not lease any part of the Centre to any hypermarket, supermarket, butcheries, greengrocers or fruit or vegetable stores or permit the expansion of the leased premises without the written consent of the lessee,” said CAK director-general Wang’ombe Kariuki in a gazette notice on the agreement between the two parties.

However, CAK rejected the application “The Two Rivers Mall is currently the largest mall in Kenya by size and capital outlay and as such has the capacity to accommodate more choices of retail stores and enable recoupment of the capital and spread of risk of non-recoupment,” said CAK.

Read: The Highs and Lows of the Kenyan Retail Sector in 2017 

Carrefour is the anchor tenant occupying approximately 10.7 percent of the total lettable area of the mall with 7,200 SQM of space.

According to Cytonn Investments, Carrefour may have had to make certain concessions to obtain support from the mall owners for exclusive retailer rights.

“While such an arrangement would prevent healthy competition among retailers, some of the benefits would be: Creation of a conducive environment for the retailer having begun its operations at the mall in February this year, thus maximizing sales, and, optimization of sales will also benefit the mall owners who get rent as a percentage of the sales made.”

Carrefour has also made another application to the CAK  to lock out its rivals from having access through tenancy at the up-market mall in Karen, The Hub, where it has an outlet.