Uchumi to cede second outlet

Uchumi’s Nairobi West outlet is set to get a new owner as the listed retailer seeks to sign off its second branch.

The firm which has closed several branches says they want to reduce expenses through the franchise model where it would establish smaller outlets (Uchumi Express and Uchumi Mini) through which Uchumi Supermarket Ltd will earn royalties of about four per cent of the sales.

Uchumi has already unlocked Lang’ata Hyper branch as a franchise ceding operations to an external firm and says another may be on the way.

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“If we can manage half of the branches on franchise and the other directly we can significantly reduce costs and boost sales,” Mr Mohamed Mohamed said.

Uchumi first tested this model in 2017 with Uchumi Express was launched in Mwiki, Kasarani with plans to launch 200 to 300 such outlets over three years.

It had been devised as part of the recovery strategy that would see the retailer penetrate the huge but underserved local estates with premium Uchumi brands.

Uchumi would package and supply a red-label assortment exclusively to the Franchise which would also earn Uchumi some money on the margins.

Mr Mohamed says that although Uchumi has shut down a large number of outlets, some of them had a huge cost implication on the business and some had already been earmarked for withdrawal.

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Uchumi is hoping to earn a windfall from the sale of the Kasarani land which it estimates will bring in about Sh2.8 billion.

When it is netted short of loans and resolution with Sidhi Investment the firm may receive a minimum of Sh1.6 billion which will be crucial in turning things around.

Uchumi SupermarketSidhi Investment