KENYA – Troubled Tuskys supermarket has exited Nakuru county, its birth place with the closure of the last branch.
The closure is the proverbial last nail in the retailer’s coffin, perhaps signifying the end of an era for the supermarket chain that began its story in the dusty township of Rongai in 1985.
The shutdown though imminent from the recent closure of branches all over the country, it is still a shocking scenario with most Kenyans wracking their brains to unravel the puzzle of what befell the once retail giant in the country.
For customers who made it a routine to visit the supermarket for their daily supplies have now been forced detour to other outlets.
“We’re saddened by the closure of Tuskys coming after another giant, Nakumatt, which also started in Nakuru, closed shop. This is a big blow.”Raymond Komen – Nakuru county executive for Trade, Industrialisation, Co-operatives, Tourism and Wildlife
It’s not just residents who will be affected by the recent closure. The Nakuru county government has also been dealt a big blow as Tuskys was one of its biggest taxpayers and employed many locals, reports The Nation.
“We shall lose a lot of revenue. They were paying single business permit, fire and safety permits among others. We’re greatly impacted by the closure,” said Raymond Komen, Nakuru county executive for Trade, Industrialisation, Co-operatives, Tourism and Wildlife.
“We’re saddened by the closure of Tuskys coming after another giant, Nakumatt, which also started in Nakuru, closed shop… This is the only supermarket that had four branches in town. This is a big blow. It was absorbing a lot of produce and products from local industries,” added Mr Komen.
Genesis of woes
Troubles at the retail chain started when the Competition Authority of Kenya (CAK) launched an investigation over the retailer’s bank accounts after reports emerged that it was not paying suppliers on time as provided for in their respective contracts.
Tuskys became the first major retailer to face the scrutiny of CAK’s Buyer Power Department, which was created after Nakumatt Holdings collapsed with Sh30 billion (US$282m) owed to suppliers.
From the probe it was found that the retailer had defaulted over 1.29 billion (US$12.1m) suppliers’ pay which it was ordered to settle immediately.
Other reports have also indicated that the chain’s troubles have been riddled with mismanagement, in addition to internal wrangles and sibling rivalry who are also the shareholders.
Not going down without a fight
In a bid to settle the mounting debt and ensure continuity of its operations, the supermarket chain owners put up a raft of strategies to include inking an agreement with an undisclosed Mauritius based fund, for the provision of a financing facility worth Ksh2 billion (US$18.4m).
It received the first capital injection from the fund amounting to Ksh. 500 million (US$4.6m) which it indicated it would utilize to cover immediate working capital requirements including partial settlement of its staff, suppliers and landlords pay.
In addition to that, the company received backing from leading suppliers who supported its business recovery plans on a win-win basis with stock guarantee worth Sh1.2 billion (US$11m).
To ensure immediate pay to the suppliers, Tusky’s set-up an escrow account which received money paid at the tills and from where suppliers’ dues were be sent to them directly and the balance left to Tuskys.
Despite all the efforts, the retailer continued to be weighed down by pilling debts, disgruntled unionised employees, fading supplier confidence and shrinking financial power to replenish essential items on the shelves.
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