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Carrefour eyes more stores as it rides on Nakumatt woes

BUSINESS
By Reuters and Macharia Kamau | April 11th 2019

French retailer Carrefour said yesterday it will increase its retail outlets to nine in the course of this year as it eyes further growth in revenues and market.

The retail chain together with other retailers, including local Tuskys and Naivas, are now fillings gaps left by ailing Nakumatt and Uchumi, which have ceded many of their locations.

The company said it has its sights on being the number two retailer in the country this year, adding floor space and using ultra-competitive pricing to boost sales and increase market share.

Majid al Futtaim’s (MAF) Kenya head Franck Moreau said since launching in the country three years ago, the franchise of the French hypermarket chain had grown faster than expected, attracting a strong client base among the country’s expanding middle class.

Rapid growth

It has seven outlets in Nairobi, with two more planned this year.

Currently ranked third with a 22 per cent market share, its revenue jumped 71 per cent last year to S14 billion. Currently, Tuskys is the leading chain with 65 outlets followed by Naivas with 45. Botswana’s Choppies, which acquired Ukwala Supermarkets, has 12 outlets in the country.

“We should certainly be number two by the end of 2019,” Moreau told Reuters in an interview, adding that MAF also planned to expand Carrefour into Uganda.

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MAF, a United Arab Emirates-based mall developer that holds the Carrefour franchise rights in 37 countries, opened its first store in Kenya in 2016, securing rapid growth in a country where just 30 per cent of retail transactions take place on the formal market.

It offers shoppers refunds if they can find cheaper equivalent items in stores run by Tuskys and Naivas, local competitors respectively first and second in the retail rankings.

Booming economy

“Our business is based on volumes rather than percentages,” Moreau added.

Most of Carrefour Kenya’s stores are located in shopping malls, in outlets vacated by the struggling Nakumatt and Uchumi.

“The potential of the Kenyan market ...is huge because you have ...a booming economy, you have a growing middle class,” Moreau said.

Competition is also heating up, with South Africa’s Shoprite and Game Stores and Botswana’s Choppies among other retailers that have opened outlets in Kenya in recent years.

Carrefour Kenya has meanwhile partnered with Jumia, an African e-commerce company of German start-up investor Rocket Internet, to offer online shopping, becoming the first major Kenyan chain to do so.

“Digital business online is not the future, it is the present,” Moreau said.

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