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Homegrown retailers gearing for duel with South African giants

By | March 6th 2012

By Jevans Nyabiage

Kenyan retail chains that have gone aggressive in their regional expansions are expected to meet stiff competition from South African retailers such as Massmart, Shoprite, Pick n Pay and Spar.

The East Africa’s largest supermarket chain, Nakumatt is eyeing markets beyond the region. It can, however, expect tough competition from South African retailers in countries such as Zambia, Botswana and Nigeria.

Nakumatt, however, is not scared. Its managing director, Atul Shah, says, "We welcome them into the local market. Our more than 5,500 staffers have worked hard to position the chain against world class benchmarks. We remain very confident of our market positioning and corporate strategy, which has even been a point of study by Wharton School, one of the world’s best business schools."

"Indeed, we believe that competition is healthy and that all players must confidently play within the market-positioning environment. We are confident that even with an international player entering the market, we’d still give them a run for their money."

Walmart plans to export its high-volume, low price business model into Africa, with its buyout of South African based Massmart.

The retail chain is known for sourcing cheap products, particularly from Asia, and their entry is expected to lead to realignments for other players, to compete with the same model.

Walmart’s move is seen as a strategy to penetrate emerging markets as its growth in the US slows down, and the buyout of Mass-mart will allow it access markets beyond South Africa into other sub-Saharan Africa countries.

Outside of South Africa, Shoprite currently has a presence in 15 African countries. This year, Shoprite plans to open its first store in the Democratic Republic of Congo. In addition to the DRC, Shoprite will open 11 new stores outside South Africa before June.

Shoprite is also seeing significant potential in the Nigerian market, where it currently has four outlets. Its other key competitor Pick n Pay has entered markets such as Zambia and Mozambique, and is also eyeing Malawi, Angola and Mauritius.

South African retailer Massmart, which was last year acquired by Walmart, also wants to add to its current two Game (a seller of general merchandise) outlets in Nigeria. It is reported that Massmart could open up to 20 Game stores in the West African country.

In Nigeria, Shoprite plans to open 20 outlets over the next two years. Spar, the voluntary retail trading chain, has launched in Lagos, Nigeria, with more outlets set to open in the rest of the country.

With a population of over 150 million, Nigeria can certainly accommodate a number of supermarket chains. However, the major challenge retailers face is finding suitable properties to locate stores.

Nakumatt is looking at moving into other potentially lucrative African markets, including Botswana, Zambia and Nigeria.

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