Uchumi Supermarkets, seeking to cut losses, yesterday shut operations in five of its stores in a move that see hundreds of employees lose their jobs. Uchumi Chief Executive Officer Julius Kipng’etich said closure of the branches will reduce the retailer’s operational costs by running on on a leaner structure “as dictated by the current business environment.”
“Their closure will enable us channel our resources to fewer branches and optimise operations for maximum gain,” said Mr Kipng’etich. The closed branches include Taj Mall in Nairobi, Embu, Eldoret Sugarland, Nakuru and Kisii.
Uchumi’s recovery is proving very painful. The closures will see 253 staff rendered redundant, which will affect thousands of families. It also means not market for individuals and firms that were supplying those branches as well as offering services like cleaning and security. Building owners have lost out on big time tenants, too. The impact of the closure will be felt for a long time to come.
Mr Kipng’etich defended the shocking move saying Uchumi “is well on track to recovery”. He said the closures are expected to hasten the retail chain’s rise to sustainability. In November last year, Uchumi made exited from neighbouring Uganda and Tanzania to stem what Dr Kipng’etich said then was excessive financial losses.
Before then, the retailer had closed two of its outlets in Kenya — one in Rongai and the other in Syokimau. Mr Kipng’etich said the retail chain had adhered to all the required legal and statutory requirements in executing the decision.
The closures were necessary to save the chain’s business.
“Uchumi is doing the right thing. If a branch or a profit centre cannot pay its way, it should close down because if allowed to continue, it would drag the rest of the company into the loss territory,” Sterling Capital Investment Director John Kirimi told the Nation.
“I find the CEO’s turnaround journey both appropriate and principled. It requires to be sustained and improved and not to falter as his predecessor’s. The CEO should stick to the three turnaround actions which he laid out at the beginning of the term.
Even as it turns around its fortunes, Uchumi faces an uphill task in the wake of heated competition from rivals. The retailor will have to deal with rising rivalry from Nakumatt, which is the Kenyan market’s largest supermarket in terms of sales and network size. Others include Tuskys and Naivas, which are also seeking to expand despite being entangled in family feuds. Uchumi had 37 outlets with 4,500 workers spread across East Africa, with a majority of them in Kenya. To date the retailer now has about 19 branches across the country.