Even Covid-19 can’t slow Naivas’ growth

Kenya’s largest supermarket chain this week opened its 63rd outlet opposite the Yaya Centre mall in the affluent Nairobi suburb of Kilimani. Fitted out to a very high standard and with a sales area of around 1,000m2, of which 25% is dedicated to fresh food and a café, this stand-alone store is focused on convenience – it is easy to drive in and out of, there is free parking, and there are no stairs or escalators.

According to Naivas chief operations officer Willy Kimani, “We carefully examined the data, found a suitable location with sufficient parking for motor vehicles and convenient access, and it was all systems go. The set-up is aligned with our desire to have as many outlets as possible in residential areas, following a ‘localism’ approach.” He added that a one-size-fits-all approach was unsuitable to the Kenyan market and that home deliveries would play a significant role in the store’s operations.

In a separate development, the retailer announced earlier this week that it was to sell alcoholic beverages in its stores for the first time, breaking ranks with arch-rival Tuskys. Kimani commented: “The decision to set up an alcoholic beverages shop in our outlets was driven by customer demand … The typical customer wants to meet all their basket requirements in a single location, and in order to facilitate customers so that they do not feel they have to move elsewhere for these purchases, we took the decision to set up and run the shops ourselves.”

The Sagaci Retail View: Naivas’ latest opening appears to be a good fit with the local market, but with two Chandarana foodplus outlets (one of which has been operating for almost three decades) and two Quickmart supermarkets within a 2km radius, competition will be fierce. On the other hand, this is the kind of market that international players Carrefour and Shoprite have largely ignored in Kenya to date, preferring to concentrate on large malls that are located a bit further away from residential areas.

More broadly, the flexibility of Naivas’ business model will be key to its continued growth, particularly as it seeks to expand into smaller markets (its long-term goal is to establish a presence in all 47 Kenyan counties).

Meanwhile, the decision to stock alcoholic beverages will boost its margins, drive more foot traffic, and help to build loyalty. It was likely driven by the fact that such international rivals as Carrefour and Shoprite stock alcoholic drinks, in addition to the influence of Amethis Finance, its new private equity minority shareholder.

If you want to know more about Naivas’ operations, retail model, market positioning, and growth strategy, you may be interested in our Naivas Retailer Research Report