For Nakumatt staff, Christmas will be just another day

Empty cashier points at Nakumatt Supermarket at the Westside Mall in Nakuru on July 05, 2017. [Photo/Suleiman Mbatiah/Standard]

It does not feel like it's Christmas Eve at Nakumatt City Hall, one of the troubled supermarket’s branches in the Central Business District fighting for dear life.

While other retail stores in the CBD have adorned their walls with strings of Christmas lights setting the mood for the big day, not even a single neon light has blinked here. Where other supermarkets are crackling with Christmas Carols, it is ghastly and ghostly silent here.

This is embarrassingly unprecedented.  But so is the fact that for the first time the about 5,000 Nakumatt employees will not have merry this Christmas.

Christmas, which will be celebrated tomorrow, will instead be gloomy for these workers who have gone for six months without pay.

If the tough times have left Kenyans broke this year, they might have left Nakumatt broken. Nakumatt’s City Hall store, just like many others, has empty shelves. Dedicating acres of shelf-space to nondescript brands has not helped save face.

The aura of comfort and aroma of freshness that endeared Nakumatt to middle-class shoppers have been replaced by gloom and staleness.

We find one of the employees (he refused to give his name fearing reprisal) trying to make himself busy. He picks packets of milk from a tray and throws them back. It is an idle game for an idle mind.

He has been with Nakumatt for five years, and has worked at this particular store for three years. He tells us about the fracas that happened here on Thursday, leading to near-closure of the store. He says that Nakumatt staff from other branches wanted to forcefully close this branch so the employees can join them in agitating for their pay.

Withdrew services

They did not succeed, but it is a warning shot by people who are desperate to also celebrate Christmas.

We ask him how he plans to mark Christmas. He just shakes his head saying: “Hio hata siwezi ongea” (I can’t even talk about that Christmas).

Even worse, he says, his employer is not saying anything. But it is not just the employees that Nakumatt has been ignoring. On Wednesday, lawyers representing the embattled supermarket withdrew their services, accusing the retailer of being stubborn making it difficult for them to fight its cases in court.

"Material differences on how to handle matters relating to the company have arisen between the firm and the company,” Diana Ogula, representing Iseme Kamau and Maema Advocates, said in an affidavit.

Iseme Kamau and Maema Advocates have been defending Nakumatt against a dissolution case filed by Africa Cotton and Gold Crown Beverages over debt. Perhaps Atul Shah has decided to let fate take its course. Perhaps he is just confused.

There is no business here. Actually, there has not been business for almost the whole of 2017, one of the employees tells us.

A few shoppers leave as soon as they come in, as though they had taken a wrong route. Two employees, presumably the only cashiers here, are busy chatting at the counter.

City Hall is one of about 41 Nakumatt branches that is on flat tyres. And with an average of two branches closing in a month, it is only a matter of time before its workers stop reporting. Unless some really big happens. So far, 23 branches have already closed.

The closure of its Lifestyle outlet, also in the CBD, is the latest in a series of shut-downs which began with Ronald Ngala branch in February, 2017.

Back then, Nakumatt MD Atul Shah blamed the closure on poor sales volume. But ten months later, and with 41 branches hanging on precariously, it is clear that Nakumatt’s financial woes go beyond poor sales volume.

The cracks in what was the country’s largest store started showing towards the end of 2016. Shoppers began missing products from Nakumatt shelves, but it never occurred to them that something was amiss. No one saw it coming.

After all, in October 2016, Nakumatt had opened its 63rd store at NextGen Mall, closely followed by its 64th store in Rwanda in an expansion overdrive that won the retailer praise.

By then, Nakumatt was even ranked among the top brands in the country together with Safaricom, Kenya Airways, Equity Bank, Crown Paints, Toyota Kenya, Bata and Tusker. Unfortunately for Nakumatt, the flaws it fought hard to hide were bound to unravel at some point.

And in 2017, Nakumatt plunged into financial crisis in one of the biggest corporate failures of the year. In keeping with its tagline of, ‘you need we’ve got it,’ Nakumatt had over the years built a reputation of offering shoppers a variety of products in an idyllic environment.

Then, shoppers started missing their favourite products on Nakumatt shelves. It did not mean much to most shoppers.

For example, it took sometime before Francis, a Nakumatt shopper who kept missing beef from a Nakumatt store in his neighbourhood, realised that all was not well.

"They kept telling me that it (beef) was finished. They would assure me that I would find it the next day,” remembers Francis, noting that he got the same excuse when he came the next day.

Some shoppers started a conversation about this on Twitter, Facebook and WhatsApp. Nakumatt dismissed the rumours.

But the rumours spread like bush fire. Soon, what was trifling grumbles by inconvenienced shoppers grew into loud complaints by frustrated shoppers.

And then Nakumatt pulled the plug on its first branch. By now, no one was amused by the management’s efforts to make the closure of Ronald Ngala branch pass off as an ordinary restructuring process.

The fact that Nakumatt was not paying suppliers was an open secret that had revealed by the suppliers themselves. The first shutdown set off a domino effect of branch-closures.

By July, a senior Government official laid bare the extent of Nakumatt Supermarket’s financial woes. He revealed to The Standard that the retailer was saddled by a Sh30 billion debt, nearly double the Sh18 billion debt that had been bandied around.

According to the source, whose line of work falls within trade-related matters, Nakumatt’s management disclosed its true financial position to the Government when it sought its intervention in regaining stability.

"The retailer was just opening branch after branch by piling up debt. It chose to grow at other people’s expense,” said the official who requested anonymity.

According to the source, Nakumatt by then owed suppliers Sh15 billion. Ten commercial banks were also on its neck, seeking to recover Sh8 billion and it had also soaked in an additional debt to the tune of Sh7 billion in commercial paper.

Nakumatt lovers heaved a sigh of relief when reports emerged in September that Nakumatt and Tuskys had signed a merger deal that would help revive the latter.

According to the deal, Nakumatt, with retail stores in Kenya's major towns, would access stock from suppliers using Tuskys' goodwill and value chain.

Four months on, there is no word on the merger. Instead, Nakumatt is on the verge of collapse having been abandoned by the lawyers who have been fighting for its survival in courts.

Receiver manager

Two things stood in the way of the deal: a court case by Nakumatt creditors seeking to close it down and a Tuskys' shareholder, Yusuf Mugweru, who filed an objection to a potential merger between the two retailers.

Nakumatt tried to file a petition seeking to appoint a receiver manager to save the deal since it would have allowed them to enjoy a moratorium on enforcement against their assets or evictions by landlords.

It lost on both fronts as the court rejected the plea and Mr Mugweru has not withdrawn his petition.

The deal suffered a fatal blow when the competition regulator rejected the proposed merger, arguing that the application for regulatory review was done under the wrong clause of the antitrust law.

Nakumatt’s attempts at revival seem jinxed, following another fallout with an unnamed international strategic investor who wanted to buy a 25 per cent stake in the retailer for $75 million (Sh7.8 billion) in January.

Naivas Supermarket has taken up the space that was occupied by Nakumatt's Bamburi branch after the High Court declined to allow the struggling retailer to appoint a receiver manager.

Tuskys has also taken up the spaces which Nakumatt was occupying in Kisii and Kisumu. French retailer Carrefour, run by franchise holder Majid Al Futtaim Holding recently moved in to the space that Nakumatt occupied at Thika Road Mall (TRM) and is poised to take up space at the Junction Mall which was also vacated by Nakumatt.

The fate of the retailer now hangs in the balance as it seeks new counsel to argue its case in court.