Kenyan supermarket chain Tumaini Self Service Limited has sold a majority stake to Sokoni Retail Kenya, the latest development in Kenya’s highly competitive grocery retail sector.
Tumaini is an established, small chain of six supermarkets, all of which are in or around Nairobi. Tumaini said its new majority shareholder, Sokoni, has provided new capital that will be used to expand the business. According to an official press release, “Sokoni has come on board, as a strategic investor, to assist Tumaini achieve its goal of becoming a leading retailer in Kenya.”
That is unlikely to happen even with serious investment. At present, Tumaini is the 15th largest supermarket chain in Kenya, according to Trendtype data. The gameplan is more likely to be:
- to scale to a size where it can attract further investment to acquire rivals such as Quickmart, Eastmatt, or Cleanshelf – all of whom operate neighbourhood supermarkets in and around Nairobi, or
- to make itself attractive to another mid-size supermarket specialist – the most obvious acquirer being Choppies (which acquired Kenyan chain Ukwala in 2015).
Kenya is due consolidation in its supermarket sector: there are too many regional/local supermarket chains operating a handful of stores. These chains are unequipped to compete head to head with Shoprite, Carrefour or Choppies. Without modernisation, most of these same chains are also of limited interest for acquisition. Shoprite, particularly, prefers to build stores around its mini-mall format (1,500m²-2,500² supermarket, bank, pharmacy, fast food outlet, car parking) than to refit an existing store. Carrefour, meanwhile, has opted for sizeable hypermarkets in premium malls.
