Uchumi looks to franchising for salvation

We previously covered the woes of Nakumatt – http://www.sagaciresearch.com/sagaretail-news-nakumatt-0618/ but it is not the only Kenyan retailer experiencing financial difficulties at the moment.

Like Nakumatt, Uchumi has a large debt (USD43 million), closed numerous branches (24 out of 40, as of July 2018) and exited the Tanzanian and Ugandan markets. Moreover, its employees are owed months of back pay, and the Kenyan government has refused to countenance a second bailout.

Uchumi was founded by a number of Kenyan state-owned enterprises during the 1970s and listed on the Nairobi Stock Exchange (NSE) in 1992. It was placed in receivership in 2006, before being revived by a government-led rescue effort. It then expanded aggressively and relisted on the NSE in 2011.

Uchumi former chief operating officer Andrew Dixon, who resigned in May 2018, commented “The brand is good but… without cash it is difficult to continue operating. I left because it lacks investment and was not paying salaries.”

However, CEO Mohamed Ahmed Mohamed maintains that a land sale in Nairobi and the adoption of a franchising strategy can turn around the chain’s fortunes. This would allow third-party retailers to use the Uchumi brand. “Our franchisees will put up stores, which we will manage for a fee, while also earning royalties,” he told The East African in July 2018.

If you want to read more:

http://www.theeastafrican.co.ke/business/Uchumi-pins-its-hopes-on-franchises/2560-4663188-oakbff/index.html