By XN IRAKI
The world’s biggest supermarket, Wal-Mart has tried to get a foothold in India but it long landed on mainland China and more recently in South Africa after buying into Massmart. Closer home, supermarkets have been an economic phenomenon in the last two decades. Uchumi pioneered and even got listed in the stock exchange. It seems to me our government was once very foresighted, starting Uchumi long before supermarkets proliferated into every estate and hamlet.
In the early 1970s, the Government even ran a variant of a derivatives market; what the Capital Markets Authority is proposing. Any aged farmer will recall the Guaranteed Minimum Return, a programme where farmers were assured a basic return on their crops. I am told corruption killed the programme.
To most people, a supermarket is a place where you select goods and in some cases services, pay for them and then take them home in polythene bags. But it is more than buying; supermarkets espouse freedom, economies of scale, steeper learning curve and economic growth.
Supermarkets are a logical growth of the kiosk, where you buy over the counter or no counter what you want. Supermarkets provide you with choices, a characteristic of economic growth. The more affluent you become the more choices you demand. That is why Japanese make cars but import cars, French make wine but import wine. Supermarkets give consumers choices, and suppliers a "lab" to test their new products and services.
READ MORE
Kindiki's absence during fuel crisis raises questions on his leadership
Address silent mental health epidemic among the clergy
The other advantage of supermarket model is replication. A supermarket can be replicated in terms of building and operations. The learning curve for new workers is steepened because there is precedence.
Chinese firms
American, European and recently Chinese firms have used the supermarket model to globalise. Think of McDonalds, Hyatt hotels, Petroleum distributors like Total, Google, and other well-known brands. They cut down huge costs by replicating what they do in one country, often "exporting" workers to ensure easier replication. Why do you think the next Toyota Kenya CEO is likely to be a Japanese?
Given the superiority of supermarket model to "kiosk" model, can we use it to grow our economy?
There have been attempts to use it. Banks have similar branches, and so are petrol stations. The success of Asian businessmen in Kenya can be partly attributed to their mastery of the supermarket model; once their business prospers, they open another branch selling the same products or services.
ENOUGH STRENGTH
That is contrasted with other businessmen particularly from Central Kenya who love diversifying. Once their business prospers, they diversify into other businesses including moonlighting as dowry negotiators on Saturdays and pastors on Sundays and putting photocopiers in butcheries.
The success of Nakumatt is envy of every prospective businessman. It must be appreciated that Nakumatt’s success is a result of unconventional thinking, Trojan horse sort of. They started in Nakuru, a far less competitive town than Nairobi. Once they had gathered enough strength, they "sneaked" into the city of Nairobi arousing no suspicion like the Trojan horse. You have seen their phenomenal growth. Naivas has tried the same model.
Incidentally, President Barrack Obama used the same strategy; he became a senator then before getting noticed he was the president; the establishment had not gathered enough ammunition to attack him. Who will use that strategy to replace Kibaki?
Vision 2030 envisages wholesaling and retailing as one of the key sectors that will drive economic growth. This sector can ride on the supermarket model, which will enable successful firms to replicate themselves not just in Kenya and East Africa, but globally. We have too few Kenyans firms that truly global, a prerequisite for economic growth needed to power Vision 2030 and anchor the new constitution.
