Shoprite has opened its second supermarket in Kenya. The new supermarket is located at Garden City Mall in Nairobi, the former site of a Nakumatt store. The South African retailer has also revealed it will open just two more stores in Kenya in 2019.
Nakumatt was evicted for defaulting on rent in December 2017. Shoprite acquired the long term lease in March 2018. The Garden City Mall store has a floorspace of 3,800m², will be open from Monday to Sunday, 9am to 9pm. The mall, which opened in May 2015, is one of the most premium shopping malls in Kenya. It also houses a branch of Massmart’s Game discounter. Garden City Mall is situated on the busy Thika Rd, a 10 minute (2.5km) drive from the Thika Road Mall (TRM). TRM’s anchor tenant is Carrefour, which has six supermarkets in Nairobi and is one of Shoprite’s main competitors.
When Shoprite first announced it had signed leases it was widely reported to have secured seven properties, the first of which, Shoprite’s flagship store in Nairobi’s Westgate Mall, opened in December 2018. Shoprite is only looking to open two further stores in 2019 – one in Nairobi and a second in Mombasa.
Although it has four stores in Uganda, Kenya has long been a sought after market. We understand that the company has no immediate plans to open in Rwanda and, having exited Tanzania in 2014 after an unhappy 13 years, has no intention of returning soon.
Kenya is a key expansion priority for Shoprite but a tiny fraction of the retailer’s overall business. For a long time Shoprite decided to open in Kenya because of the strength of domestic supermarket chains: Tuskys, Nakumatt, Uchumi, Naivas and a long tail of smaller chains. The Garden City Mall was Nakumatt’s 53rd store in East Africa. Its store network, like that of Uchumi’s has been decimated to the point of near collapse. In two years, 2015-2017, Nairobi’s supermarket sector opened up with premium mall space flooding back onto the market and yawning gaps left where Nakumatt and Uchumi had once operated.
At face value, it looks like the South African retailer is in no rush to open its stores in Kenya – in comparison to Carrefour’s partner Majid Al Futtaim, which responded to the return of anchor tenancies to the market by snapping up four properties, all of which have opened.
In other expansion markets, notably Angola and Nigeria, Shoprite has been a pioneer in opening up supermarkets in secondary cities. Shoprite is better positioned than Carrefour to target aspirational and mid-level consumers (its core market in South Africa) and move away from premium malls. The more interesting question whether Kenya’s secondary cities, where demand and competition levels are much lower, are part of Shoprite’s near horizon. It is not clear they are.
