some water, I doubt if a significant
player has emerged to threaten the
market hold of the big supermarkets.
Yes, several supermarkets have come
up in the estates but most of them are
Mom and Pop shops with no brand
equity or established infrastructure.
It is far fetched to imagine that these
nondescripts outlets can bring down
the established brands. Supermarkets
by their very nature are high volume
low margin business that gives the
big operators with established brands
unmatched economies of scale.
Dream Taken Too Far
With all the foregoing one is left
wondering where the rain started
beating us! Here is our considered take
on the unfolding scenario in the sector.
Sudden drop in value per basket
While many theories are being
advanced as to the reasons why our
supermarkets are struggling, from a
marketing perspective, it is imperative
to look at the the drop in value per
basket for every shopper as the main
driver of this catastrophe.
The rise in inflation, fall in general
income levels with a consequent drop
in basket values is the immediate
trigger of supermarket struggles. We
must therefore trace and confront the
factors that are driving this falling
income.
Credit crunch
In retail business, cash flow is king.
Supermarkets sell on cash. By passing
the interest rate cap law, Kenyans
were dried of cash by the spited banks.
The small consumer loans that fueled
household purchases dried as well and
with that, the downfall of our retail
sector.
Staff despondency
Common sense dictates that one
should never cut the same branch he
is sitting on. It therefore follows that
ordinarily staff would not sabotage a
business from which they derive their
livelihood. Its only when signs are clear
the business is under threat or going
under that’s when the staff turn rogue
and start cannibalism their source of
livelihood. So when some Nakumatt
staff turned hostile to the business it
was a clear indicator that signs were
not promising for them. The same
thing happened to Uchumi
Taking your business regional is
the next logical thing to do for
any ambitious business. However
regional exposure comes with
its own challenges