Shoprite keen on stake in Kenyan market

SHOPRITE Holdings is in talks to open its first shops in Kenya by filling retail space left empty by the struggling Nakumatt Holdings chain.

“We are currently in talks with some of the property owners but nothing has been signed,” Shoprite director Gerhard Fritz said.

Shoprite was awaiting the outcome of merger talks between Nakumatt and local rival Tusker Mattresses before deciding whether to proceed, he said.

Taking over vacated outlets would be the preferred way to enter East Africa’s largest economy as the retail market there was “too well established” to build new stores, said Fritz, who runs Shoprite’s African operations outside its home market.

The move would represent a major step in the expansion of Shoprite, Africa’s biggest food retailer, as it seeks to strengthen its position outside SA, where consumer confidence has been weak because of sluggish economic growth.

The grocer had 2 689 stores in 15 countries across the continent at the end of its last fiscal year.

Shoprite faces competition in Kenya from retailers including Game – owned by South African retailer Massmart Holdings, which in turn is controlled by Wal-Mart Stores – Carrefour of France, run by franchise holder Majid Al Futtaim Holding, and Choppies Enterprises of Botswana.

Local grocers include Chandarana Foodplus Supermarkets and Naivas Supermarkets.

For its part, Nakumatt has shut more than a dozen branches in Kenya, Uganda and Tanzania as East Africa’s biggest retailer struggles to pay suppliers.

It owes more than 30-billion Kenyan shillings (R4.07-billion) to its creditors.

CEO Atul Shah, whose family controls the Nairobicompany, said last month he was in talks with Tusker, which trades under the Tuskys brand.

Shoprite also planned to buy two Nakumatt sites in Uganda, Fritz said.

The South African company’s shares closed 0.9% higher at R207.49 on Friday in Johannesburg, valuing it at R123-billion. — DDC