Kenya: Shoprite and Tuskys struggle, Naivas opens another store

As the impact of COVID-19 forces its way into the economy, Shoprite and Tuskys have closed stores. Meanwhile, Naivas, the #1 supermarket chain in Kenya, has opened a new 950m² supermarket in Nairobi’s Hurlingham suburb.

Shoprite is permanently closing its Waterfront branch in Karen, Nairobi after trading slowed. It has said the store is no longer viable. The closure means that Shoprite has just three stores in Kenya, out of a seven it had originally planned in February 2018. For some time Trendtype has warned that the slow opening rate of stores indicated problems for the South African chain in Kenya. While rival Carrefour (Majid al Futtaim) has opened seven stores, and rivals Naivas and Quickmart have expanded rapidly, Shoprite has been left underpowered in Kenya.

Tuskys, which took over as Kenya’s leading supermarket chain when Nakumatt hit financial problems, has also closed stores. It has announced it will temporarily close 3 stores in Nairobi, Kitale and Mombasa, ostensibly to push customers to larger branches nearby where social distancing can be maintained. However, Trendtype believes that Tuskys may be using the opportunity to test the impact of closing these stores in the longer term.

Meanwhile, Naivas goes from strength to strength. In January 2020, Amethis Finance, which successfully exited Cote d’Ivoire’s #2 chain CDCI, acquired a 30% stake in the company. In mid April DEG and co-investors including Amethis Fund II and the International Finance Corporation agreed to invest a sum believed to be around $10m in Naivas. Naivas is reportedly also looking to open stores in Rwanda and DRC as part of a shift westwards.

While Shoprite is closing a store, Naivas has opened its 63rd branch, called the Kilimani Food Market. The new store is in Nairobi’s middle-class Hurlingham suburb and has around 950m² of retail floor space. At least 25 % of floorspace in store will be devoted to fresh food and takeaway food – a newer more upmarket concept Naivas has used elsewhere.

In early April Majid Al Futtaim (MAF), which operates the Carrefour franchise in Kenya, revealed that sales had risen by 28% year on year in Kenya to KSh18.7bn ($174.5m), or $24.9m per store. In January 2020 MAF opened its first Carrefour store in Uganda, where Shoprite is the market leader. It will be joined by a second outlet at Kampala’s Metroplex Mall, and a further three more stores are planned to open within the next three years.

 With the exit of Nakumatt and Uchumi, and the possible exit of Shoprite, the front runners in the Kenyan supermarket sector are now clearly Naivas and Carrefour. Behind them, Adenia Partners-backed Quickmart, which merged with fellow chain Tumaini in September 2019, is also expanding rapidly.