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Shoppers ‘rob’ supermarkets of their last stocks

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[dropcap]K[/dropcap]enyans have in recent days taken to social media to bemoan the woes facing hitherto leading retail chains, Uchumi and Nakumatt Supermarkets with the latest photo being a picture showing empty shelves as their financial woes pile up.

For the better part of this year, Nakumatt has been struggling to stay in business amidst empty shelves and closure of some branches. They attributed the stock outs to challenges with their new Warehouse Management Systems (WMS).

“The stockouts are inadvertent, affecting specific branches largely due to supply chain constrains as the new WMS stabilises. The system features an auto replenish system connected to our central warehouse. In some instances, the auto replenish system has faced challenges, occasioning supply delays as we resort to manual orders. We are however working round the clock to address the challenges,” read one of its statements to a local daily in April.

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However, it emerged that Nakumatt woes were more than the system when one of their creditors, Gold Crown Beverages (Kenya) Ltd, filed an insolvency petition in July seeking to recover over Sh60 million. Before that, African Cotton Industries Ltd had also moved to court seeking to recover over Sh70 million owed by Nakumatt.

Efforts to rescue the retailer by the government seem to have hit a dead end, with Banks that held talks with the government to rescue Nakumatt seemingly shying off to lend them.

Nakumatt has been downsizing in recent months and also owes various landlords and suppliers millions of shillings.

Early July, Thika Road Mall (TRM) through Moran Auctioneers, seized a number of Nakumatt’s assets, including six moving trucks, 400 customer trolleys, office furniture, ovens and other electrical appliances to cover rent arrears amounting to Ksh51 million, prompting a court row.

An empty Nakumatt store.

In mid-June, Nakumatt had not paid 1,555 employees their May salaries even as it sent more than 100 on compulsory leave, citing low business volumes. The same case was reported at Uchumi, which had not paid more than 1,300 employees May salary.

Uchumi’s case is not any better as by the beginning of this year the retain chain owed creditors a total of Ksh7 billion shillings but its assets were worth Ksh5 billion with auditors saying that it could be even worse because the value of some assets could not worth the amount quoted. This means that if Uchumi sold all its assets to pay off its creditors, it could still be in a Ksh2 billion-debt. Currently, it is estimated that Uchumi owes suppliers and financiers more than Ksh5 billion.

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The woes are far from over, as the turnaround CEO will be leaving the company soon to join the media industry, according to credible sources. Julius Kipngetich, who contract as Uchumi CEO expires next month is set to be named the CEO for the Standard Group after the exit of Sam Shollei.

Mr Kipngetich was the hope of the Supermarket. He joined Uchumi in August 2015 from Equity Bank where he had worked for three years. He was expected to help turn around the fortunes of Kenya’s oldest supermarket brand but things have not been easy for him, with efforts to get a government bailout hitting a snag.

The government has been dithering in releasing Ksh1.2 billion to the retailer as part of a bailout loan, leaving the retail chain gasping for breath. He had recently announced that Uchumi had secured a strategic investor who is set to inject Ksh3.5 billion into the retailer which will partly plug the Ksh5 billion debt hole the supermarket chain owes suppliers and financiers.

ALSO SEE: Nakumatt shuts its newest high-end branch

That has not materialised. His exit might leave Uchumi at the mercy of shoppers and financiers, which might see the oldest supermarket in Kenya become an ancestor.

The two retailers might have ignored the entry of new supermarkets like Naivas, Peter Mulei and sons, Eastmatt, Mathais among others. They never invested to counter the competition which came with the new entrants; hence could have been caught offguard.

Sometime back, one shopper depicted the sorry state of affairs at Nakumatt. He wrote: “Shopping at Nakumatt nowadays leaves one feeling like you are robbing them of their last earthly possessions.”

How dire can it get?

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FRANCIS MULI
FRANCIS MULIhttp://www.businesstoday.co.ke
Editor and writer, Francis Muli has a passion for human interest stories. He holds a BSc in Communication and Journalism from Moi University and has worked for various organisations including Kenya Television Service. Email:[email protected]
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