KENYA/FILE: Kenyan retail store chain Nakumatt looks to expand into southern and west Africa markets

Record ID: 362265

  • Title: KENYA/FILE: Kenyan retail store chain Nakumatt looks to expand into southern and west Africa markets
  • Date: 20th April 2012
  • Summary: NAIROBI, KENYA (FILE-2011) (REUTERS VARIOUS OF PEOPLE AT THE TILL PAYING FOR THEIR GOODS
  • Embargoed: 5th May 2012 13:00
  • Keywords:
  • Location: Kenya, Zambia
  • City:
  • Country: Zambia Kenya
  • Topics: Business,Economy
  • Reuters ID: LVAA11WFB4RNGKRQIOITYV5HSI64
  • Story Text: Nakumatt, Kenya's largest retailer, plans to expand across Africa by focusing on opening stores in more eastern Africa countries over the next two years as well as east and west Africa, its managing director said on Thursday (April 19).
    After starting three decades ago as a small mattress shop in the provincial town of Nakuru, family-owned Nakumatt has grown into a firm with a 500 million US dollar annual turnover and pan-African ambitions.
    "We are looking at beyond East Africa, that will be a plan that we will start after two years. We need to stabilise where the opportunity is in East Africa, we understand East Africa very well of course we have done studies from many parts of this continent which include Nigeria, Ghana, from Southern part also and we are looking at possibilities of how we can take this brand across to the West, to the South and North of course once we get onto Ethiopia there is nothing stopping us going northwards," he said.
    In Southern Africa Nakumatt is likely to face stiff competition from chains that currently dominate the market including Masmart and Shoprite already firmly established in South Africa and several other countries.
    However, Shah said at least 10 parties were interested in a 25 percent stake that Nakumatt is selling to fund expansion, illustrating the potential of a sector with annual growth of 15-20 percent even before accounting for any takeovers. The interested parties include larger foreign chains and private equity firms he said.
    Nakumatt aims to raise sales to 50 billion shillings (600 million US dollars) this year from last year's 40 billion, at its 36 stores in Kenya, Uganda, Rwanda and Tanzania, Atul Shah told the Reuters Africa Investment Summit.
    "We are looking at wrapping up in Tanzania with four stores by end of next year, in Uganda there are three more in the pipeline already off the ground so that is the expansion in Tanzania and Uganda. In Rwanda there is one more branch coming up next year, Burundi and Juba is the next target, Burundi we have already identified space and Juba we have already identified space so it is between 12 and 18 month project," Shah said.
    He added that he was not concerned at the growing conflict between South Sudan and Sudan, expecting it to be resolved by the time Nakumatt moved in.
    Shah, a 40-year veteran of the retail business, said consumer patterns have changed in the last five years.
    "Big change especially in the last five years. The demand for lifestyle products, the demand for quality, demand for everything... big change. At one time it was price price price but now it is not price anymore it is brand, quality and what they will get for their money," said Shah.
    Strong economic growth rates in Africa in recent years have given rise to a new breed of consumers, helping drive up shares in local retailers such as Kenya's Uchumi, which are up 85 percent this year to date.
    Consumers have also caught the eye of global retailers such as Wal-Mart, which acquired South Africa's Massmart last year in a 2.4 billion US dollar deal.
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