To cut on costs, Supermarket chain Tuskys is set to send an undisclosed number of employees home in a restructuring move that sucks in the retailer into the long list of Kenyan companies that have sent employees home in the recent past lamenting a tough business environment.
On Friday through a letter, the retail chain told the affected employees that it is embarking on a restructuring exercise that will affect all departments as the company moves to avert a slide into negative territory.
In the letter sent to the staff and copied to Kenya Union of Commercial Food and Allied Workers (Kucfaw) seen by Business Today, the company’s General Manager Human Resource Francis Kimani lamented that the sales have dipped as the entry of Private Equity-backed retailers move to gain a stranglehold on the market.
“It has become apparent that the company’s performance in the last two years has been on the decline. As such the company has embarked on the process of restructuring its operations to ensure financial viability,” read the letter.
This represents a worrying trend for retailers in the country following the collapse of popular retailers Nakumatt and Uchumi which lost their position at the top of the pile due to mismanagement.
The struggles of Tuskys can be attributed to the rapid expansion of Quickmart and Naivas, two retailers riding high on massive investment from Private Equity (PE) firms.
It is not immediately clear how many members of staff are on the chopping block at Tuskys but the company is set to hold crunch talks with its staff on Friday where staff will know their fate and the way forward discussed.
Citizen Digital on Friday quoting a high-level source in management reported that affected staff will receive one month’s salary and further take-home pay for any untaken leave days and severance with the termination dues being collected on April 4.
In September last year, Adenia Partners, a PE firm with vast interests in Sub Saharan Africa through its special purpose vehicle Sokoni Retail Kenya announced the acquisition of Quickmatt which was hastily merged with Tumaini to form the third-largest retailer in the country.
The result has been rapid expansion in Nairobi and in various Kenyan town. The retailer’s growth has been warmly received by the market.
In January this year, Amethis Finance, a French PE firm announced the acquisition of 30% stake in Naivas.
It is perhaps against this backdrop that Tuskys is feeling the heat from competition forcing the retailer with 65 branches in across Kenya and Uganda to scale back its operations.