Job losses looming as Nakumatt plans to close more branches

Regional retailer Nakumatt Holdings restructuring is now in high gear, turning to cost-cutting which will include closing of poorly performing branches.

The retailer is seeking to reduce its total cost base by up to Ksh1.5 billion annually, guided by a recently developed operating strategy.

Nakumatt Holdings Managing Director Atul Shah says the new operating strategy has been developed to provide a recovery platform that replaces the Nakumatt 2.0 strategy, which was was developed in 2010.

Under the new strategy, Nakumatt will reduce its store keeping unit (SKU) exposure by retaining frequently purchased items and delisting slow moving products. Closing of branches is likely to lead to job losses.

The firm will also effect a strategic branch culling exercise targeting several of its poorly performing branches in Kenya and Uganda as part of the cost cutting strategy. The branch culling exercise, Shah explained will also involve the opening of new branches at carefully selected high traffic locations.

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“The branch culling strategy will start off with sub-optimally performing branches whose leases contracts are due for renewal to be followed by branches in poor locations,” Mr Shah explained. “We have also embarked on a shelf stocks optimisation programme to enable us retain a lean variety of profitable retail products.”

As part of the strategy, Mr Shah confirmed that plans are underway to revert the struggling Nakumatt Haile Selassie branch located at KU Plaza, back to Kenyatta University, by the end of this month, at the expiry of the current lease.

The closure of Nakumatt Haile Selassie will be the third closure to be undertaken by the retailer in recent months following similar developments at its former Nakumatt Ronald Ngala and Nakumatt Katwe in Nairobi CBD and Kampala, Uganda respectively.

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The firm, Shah added has also adopted a group wide freeze on new staff signings, opting to absorb and progressively deploy staff from recently closed branches to its existing and upcoming outlets.

All the employees previously assigned to work at Nakumatt Ronald Ngala have already been absorbed at other Nairobi branches. Staff members currently serving at Nakumatt Haile Selassie, will be absorbed at other Nakumat branches ahead of their re-deployment to upcoming branches including, Nakumatt Embakasi at the new Southfield Mall.

[crp]