Retail heavyweights go toe-to-toe in Kenya

Shoprite, Africa’s largest grocery retail chain, today opened its first store in Kenya, located in the Westgate mall in central Nairobi. This brings the South African retailer into direct competition with Carrefour, which has an outlet in the nearby Sarit Centre, for the first time.

With its dark colours, non-ceramic flooring, wooden shelving and wide aisles, the new outlet is fitted out to a much higher standard than is typical for a Shoprite store – it is reminiscent of the retailer’s more upmarket Checkers banner (almost of which are to be found in its domestic market). Targeted squarely at middle- and upper-income consumers, this concept is similar to the more upmarket stores recently opened in the capital by local chains Naivas and Chandarana (see our previous story Kenyan supermarkets aim higher), perhaps leaving Carrefour’s more traditional fit-out looking a little staid by comparison.

However, Shoprite appears to have scaled back its growth ambitions in Kenya, at least in the short term. When the retailer announced its entry into the Kenyan market in February this year, CEO Pieter Engelbrecht told Reuters, “Retail in Kenya currently is in total disarray … we could now go in and secure seven premises without paying anything other than agreed rental.”

But the reality has been more complicated. Gerhard Fritz, Shoprite’s head of operations outside South Africa, recently told Bloomberg “Due to the aggressive expansion of Carrefour, there are no cheap sites left behind with the demise of Nakumatt and Uchumi. We have declined some sites, as we feel rents are too high. Landlords are having a field day playing us off against each other.”

As a result, Shoprite is now planning to open just three more stores during the next 12 months. Carrefour already has six in Nairobi and is set to enter the neighbouring Ugandan market (where Shoprite currently has four stores) next year.

If you want to read more, click here