Carrefour sales rise to Sh40b on branch expansion, e-commerce

Carrefour Mega store along Uhuru Highway, Nairobi. [Wilberforce Okwiri, Standard]

Foreign-owned retail chain Carrefour Kenya shrugged off the effects of inflation and tough economic conditions in the country to post growth in sales last year by nearly Sh3 billion to Sh40 billion (1.14 billion Emirati dirham).

Majid Al Futtaim, the exclusive holder of Carrefour's franchise in Kenya, said the revenue had increased from Sh37.2 billion (one billion dirhams) recorded the year before as it opened more branches and attracted more customers to its stores concentrated in Nairobi.

The supermarket operator's sales growth of eight per cent bucks the trend of poor performance by its foreign peers and Kenyan counterparts that have either recently exited the Kenyan market or reduced their footprint, or even collapsed altogether citing losses.

"Overall, Majid Al Futtaim delivered balanced growth through 2022. Positive contributions from across our portfolio, bolstered by the inherent strength of the UAE economy, have enabled the Group to achieve double digital revenue growth despite the ongoing macroeconomic challenges," said Majid Al Futtaim Holding chief executive officer Ahmed Galal Ismail in an investor brief.

Online shopping

Carrefour opened its first store in Kenya in 2016 and now has 19 outlets. It has been aggressively growing its online shopping arm in Kenya riding on the rise of e-commerce which it sees as a bright spot.

It has been conducting aggressive promotions and online sales to attract shoppers putting pressure on other retailers to follow suit.

"In Kenya, we collaborated with Kenya Export Promotion and Branding Agency to amplify our support for local suppliers via the Made in Kenya brand, resulting thereafter in the promotion of 40 products from 17 local suppliers to customers through discounted prices, in-store communication, social media platforms and the Carrefour app," said Majid Al Futtaim.

Carrefour announced the record sales as troubled Tuskys on Monday announced the closure of its Kenyatta Avenue branch in Nairobi, one of the three that is still operational.

"Due to unavoidable circumstances, we have had to close this branch. Kindly support our Tom Mboya street branch which remains operational," Tuskys said dealing a blow to its revival. "Any inconvenience is highly regrettable."

Homegrown retailers Naivas, and QuickMart, which rose to fill the void left by troubled Tuskys, Uchumi and Nakumatt, have recently turned to deep-pocketed private equity (PE) firms for their expansion agenda.

Backed by deep-pocketed Private Equity funds, Naivas and QuickMart have grown to become two of Kenya's largest retail companies by sales and employment, avoiding the missteps of their predecessors for now.

The two retailers are taking the battle to Carrefour. Many other foreign retailers have found the going in Kenya tough.

South African retail giant Massmart which operates the Game Stores announced plans to sell its three stores in Kenya, marking the latest of a string of retreats from East Africa by foreign retailers.

Massmart's exit followed previous similar exits of South African retailers Shoprite and their Southern Africa peer Botswana-based Choppies, which had entered the market by acquiring a majority stake in a struggling local retailer in 2016.

The retreats have left Carrefour as the only major foreign-owned large-scale retailer in Kenya. Carrefour said earlier that following its increased sales in the country, it will continue the expansion of its retail business with a focus on online shopping.

Its nineteen stores are located across the country with stores in Nairobi, Kisumu and others in the coastal city of Mombasa, and Diani. Local businesses are confronting a tough business climate as hard-pressed Kenyans contend with a worsening cost of living crisis by cutting back on spending.

Some homegrown retailers earlier admitted that last year posed economic challenges with the cost of living crisis looming large over both businesses and customers. Surging inflation is driving up costs for businesses and hampering consumers' purchasing power.

The Kenyan retail environment in townships and rural areas has long been dominated by small, mainly informal, business traders offering basic products to a low-income consumer market.