Problems facing Nakumatt get mixed reactions

“You need it, we’ve got it”. That has been the slogan for Nakumatt, indisputably the largest retail store in the East African region, and whose stock and quality assurance has been the envy of competitors.

That has, however, been changing in recent months.

Signs of struggle for the supermarket, whose symbol is an elephant, began when customers in Uganda went viral to complain about empty shelves in October 2016. The retail chain put on a brave face, but admitted facing stocking challenges, opening up for the first time to investors.

The two outlets in Katwe in Uganda have since closed amid rental arrears and the invited investor who was to buy a 25 per cent stake and pull the elephant out of the mud seems to be taking too long to arrive. In Nairobi, where the retail chain recently closed down the Ronald Ngala Street branch, a deeper stock crisis is simmering.

“I am shocked at just how narrow choices have become and just how many items are no longer available. I shop at [Nakumatt] Mega along Uhuru Highway where I am used to getting everything. I could hardly deal with half my shopping list this month,” Ms Mercy Otiende, who lives in Nairobi West, said.

It is not the first time the shelves have gone dry at Nakumatt stores. The retail chain has had to defend its empty shelves more than twice in the last one year as customers took to social media to decry the situation.

The latest explanation revolved around a supply management system that had hitches. The April 2017 stock-out crisis came barely two months after shoppers raised concerns about blank shelves at the Nakumatt Junction and Embakasi branches. The bottom line remained a biting cash crunch and trouble with unhappy suppliers.

A walk through various outlets painted the picture of a falling giant. Shelves had fewer items neatly arranged on the edges to give the picture of full stock. Others were openly yawning with stock-outs as employees spoke with anxiety over the retail chain’s future.

CUSTOMERS ‘UNHAPPY’

“We are afraid. Our customers are unhappy and we can see the signs unfolding every morning. We can only hope that we last a little longer,” a worker at the City Hall branch, who requested anonymity, said.

The Nation spoke to several customers and staff whose feelings swung between sympathy, despair and hope. Hope that the retailer will not sink any time soon.

Suppliers who are said to have held on to their goods amid Nakumatt’s spiralling debt, have expressed the same concerns and hope that the retail store will recover from its financial crisis.

Many suppliers, who spoke on condition of anonymity, said they were frustrated by failed promises and bouncing cheques issued by the retailer and have since been withholding goods. They said the hope is fast fading as signs of worse times keep emerging.

SUPPLIERS WORRIED

Association of Kenya Suppliers chairman Kimani Rugendo said the suppliers had developed cold feet towards struggling retailers like Nakumatt but remained hopeful that the situation will change.

“They have given us a lot of promises pegged on a strategic investor coming to rescue the situation. Our only hope is that they have not closed down and, should they close down, then we are doomed. Many of our members have frozen supplies to struggling retailers because they cannot run a business without being paid. Please note that not all the retailers are struggling,” Mr Rugendo said.

While banks have the Kenya Deposit Insurance Corporation to secure depositors from shock when the institutions collapse, the retailers lack this, leaving them exposed in the event that Nakumatt goes under.

The government is equally concerned with the growing speculation that the giant store is about to close some of its branches in Kenya with dire consequences to the economy and the general retail market.

TRADE MINISTRY

The Ministry of Trade wrote to the retail chain last month demanding to know its status.

While many agree that the retail market is undergoing tough times, no one seems to be able to comprehend just why Nakumatt’s deceleration was so rapid. In fact, its close rival, Tuskys, recently shut down its branch on Sheikh Karume Road and that is all that has become of the retail chain that traces its roots to Nakumatt. Uchumi took quite long to sink as well before it was revived later.

Tuskys Chief Executive Daniel Githua told the Nation that the retail market was going through a tough phase of development hence the need for careful expansion and strategies that are in sync with the market. “These are tough times but I think we have to measure the expectations of customers and target their tastes as well as what fits them. The market is still, for instance, unripe for any large 24-hour shopping mall,” Mr Githua said.

Nakumatt’s model, where most of its stock is only displayed on behalf of others, was admired by many as it stood very little risk.

Even the entry of more international brands like the French Carrefour and the emergence of many shopping malls seemed not have shaken the retail chain.

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