Botswanan supermarket chain Choppies, which bought out Ukwala in Kenya and was trying to become a major grocery player in the country, is shutting stores and rumoured to be struggling to pay suppliers. Trendtype looks at what might happen to its store network.
Choppies’ growth in Kenya, one its core target markets, has come to a halt. Kenyan media is reporting that suppliers have not been paid – a highly sensitive issue given the prevalence of supplier non-payment in Kenya (most obviously with Nakumatt, but also a feature of Uchumi, Tuskys and Naivas). It has closed two stores in the past couple of months: in Kiambu and Bungoma.
Choppies planned to open two further – and larger – stores in 2019 in Kenya. Those plans now look unlikely as the company is still working its way through its financial reporting mess, which has seen trading of its shares suspended since late 2018 and the suspension of longtime CEO Ram Ottapathu.
For some time, Choppies looked like it was attempting the impossible – simultaneous expansion in South Africa, Zimbabwe, Zambia, Mozambique, Namibia, Tanzania and Kenya. Its network in Kenya looks both vulnerable (Carrefour, Shoprite, Massmart and a long list of domestic chains Tumaini, QuickMart and Cleanshelf are all seeking to expand in country) but also an opportunity to divest. The question is, who to? Most of the store estate is small and poor quality, but in high traffic locations. We do not think any of the major international players will be interested.
But it may interest investors. In January 2019, Adenia Partners, a private equity firm investing in Sub-Saharan Africa completed an investment in Tumaini to help the chain grow from what was 9 outlets. The Choppies network in Kenya is a perfect size for Africa retail focused PE firms and a transformational acquisition for a tier two player like Tumaini, QuickMart or Cleanshelf.