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French retailer Carrefour rattles market with new push to lock out competition from prime locations in Nairobi

BUSINESS NEWS
By Otiato Guguyu | December 6th 2017
Carrefour’s Store Manager at Thika Road Mall, Jean Yves Genies, (left) helps pack a customer’s shopping at the till. [David Njaaga, Standard]

French retailer Carrefour has rattled the market with a new push to lock out competition from prime locations in Nairobi.

The retailer, run by franchise holder Majid Al Futtaim Holding, now wants to stop rivals from gaining tenancy at the Hub Karen, where it has an outlet, after making a similar application to the Competition Authority of Kenya (CAK) for the upmarket Two Rivers Mall.

Carrefour, which shares space with Chandarana Supermarkets at Two Rivers, first applied for exclusivity from peripheral businesses in malls in March last year.

In a notice published in Friday’s edition of the Kenya Gazette, Carrefour has sought the nod from the competition watchdog to bar the entry of any new food outlet in the malls for the next 19 years or any other supermarket or hypermarkets for six years.

The application, if approved, would keep at bay other local supermarket chains that may be eyeing space in the high-end shopping complexes.

It would also lock out other businesses, including butcheries, green grocers, and fruit vendors from the malls.

But CAK yesterday gave the strongest indication that it may not approve the request, although it can still make an exemption under the law.

“The aforementioned clauses are in contravention of sections of the Competition Act unless an exemption is granted under section 25(1), hence the application,” said CAK Director-General Kariuki Wang’ombe.

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Carrefour has been on an aggressive expansion drive, having recently snapped up space vacated by troubled retailer Nakumatt at the Thika Road Mall (TRM) and The Junction Mall.

Karen Waterfront, which recently signed up the Game Stores as its anchor tenant, said it did not approve of monopolisation of the retail market.

“We believe careful evaluation of tenancy mix ensures that all retailers thrive in the new mall, which ultimately benefits the landlord,” said the mall’s development manager, Freda Rutere-Mbugua.

Carrefour has also stirred up controversy among local suppliers over its stringent contract award system that has locked out most of them.

Through its standard contract in the US and Europe, the retailer charges extra fees known as pay-to-stay and listing fees, which are used to gauge a supplier’s seriousness.

The money also acts as security to the supermarket in case a supplier’s product fails to sell.

The Kenya Association of Suppliers has been battling the requirement that all suppliers pay a non-refundable Sh1.4 million fee and commit to paying monthly rebates to do business with the retailer.

Local suppliers have found the going tough as international retailers shy away from local products.

If CAK approves Carrefour’s request, suppliers will be forced to seek for alternative outlets for their products.

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