KENYA – Kenya’s largest and fastest growing supermarket chain, Naivas is seeking to be the new tenant of Uchumi’s only standing outlet in the Central Business District in Nairobi, along the Aga Khan Walk.

Naivas’ move of taking over the outlet, which had for ages been occupied by the cash strapped supermarket chain, Uchumi, hints of an end of an era.

The retailer has been sitting on pins and needles due to debt running into billions, despite multiple cash injection from the government to keep the operations afloat.

Other than in Kenya, Uchumi is also facing suspension from trading it shares on Uganda Stock Exchange’s main investment market segment and the listing of the company’s shares on the official list.

As the once giant retail sector player faces possible collapse, Naivas is on an expansion spree as the company is also set to open a new store in Malindi next month, reports Business Daily.

The second premise will be at the Malindi Mall, which hosted the collapsed Nakumatt Supermarket, targeting hundreds of shoppers around the region.

The new stores are expected to raise the retailer’s branch network to 78, an addition to the recently opened 76th branch in Juja City Mall off Thika Road.

Naivas has over the past few months been taking up prime space vacated by troubled rivals, after It gained financial muscle following an equity deal with France-based private equity (PE) fund Amethis Finance, alongside IFC, DEG and MCB Equity Fund.

Retail expansion holds off losses for malls

In other related news, a new report by Cytonn Research dubbed the Kenya Retail Report 2021, has indicated that the average occupancy rates for retail properties have improved marginally to 78.4 per cent from 76.6 per cent, while the average rental yields sit at 6.8 per cent from 6.7 per cent previously.

The improved performance of the retail sector properties has been flanked by aggressive expansion plans mainly led by supermarket chains with Naivas and Quickmart leading the pack.

Other food service players in ongoing expansion plans in the country who have boosted occupancy rates include Kentucky Fried Chicken (KFC), Optica Limited, ArtCaffe Group and Java House.

“These aggressive expansions move by the retailers taking up space previously occupied by troubled retailers as well as new retail spaces has therefore boosted the market’s performance,” notes the report.

Supermarkets have largely remained anchor tenants for most retail hubs, especially malls hence making their presence in an outlet integral to occupancy by other businesses.

For instance, the exit of Shoprite from the Garden City Mall on the Thika Super Highway proved detrimental to the outlet as the overall customer footfall collapsed following the exit of the anchor tenant.

Other malls to have recently lost their anchor tenant but replace the key client in recent months include the Juja City Mall, Southfield Mall, Greenspan Mall and the Next Gen Mall.

Besides the expansion of key retailers, the report cites improved infrastructure development, and the affordability of retail spaces as other factors driving growth in the sector.

Nevertheless, constrained spending power among customers, limited access to credit and the oversupply of retail spaces are all seen as headwinds for the sector’s growth.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE