Nakumatt buys rival for Sh400m

For Nakumatt, it seems, things had to get worse before they get better.

Kenya’s leading supermarket chain pulled a surprise on Thursday with the announcement of a major acquisition of one of its rival’s branches in Nairobi, considered the most lucrative retail market in the country.

Mr Atul Shah, the managing director of Nakumatt Holdings, which runs the supermarket business, said it had bought out Woolmatt Supermarket’s four branches in the city centre, the biggest raid ever by local retail chain on a competitor.

Internal sources

The deal is valued at more than Sh400 million and is financed from internal resources, a person close to the supermarkets told Daily Nation.

“The deal will now see us taking over the running of Woolmatt Supermarket branches in a move geared at enhancing our presence in the CBD (central business district)” said Mr Shah, during the opening of its Kakamega branch.

The retail chain, seen in the past as targeting the wealthy class who shop in large shopping malls, appears to be going after the lower income shoppers who are a force to reckon with in retail due to their sheer numbers and frequent visits.

Nakumatt will now have a heavy presence in the city centre, crowned by its glamorous Lifestyle branch, as it takes competition to the doors of city centre kingpins Tuskys, Ukwala and Naivas as well as Uchumi.

The supermarket has been visibly absent from the lower income side of town since its Downtown branch on Kimathi Street burnt down last year.

Earlier, its Thika Road branch was brought down to pave the way for road expansion.

This robbed it of key branches and dented its cash-flow, forcing it to consider a strategic partner to inject in more capital to continue its expansion and replace the dead branches.

The company said it has yet to reach a deal on this, but sources have intimated that Satya Capital of UK could have acquired a 30 per cent stake.

Mr Shah said refurbishment had started for the Woolmatt branches ahead of opening in a month’s time.

The Kakamega branch is the first Nakumatt outlet in Western Province and will compete with small-time operators like Walias and Yako.

The supermarket has been bullish lately, splashing Sh450 million on four new branches including Kakamega, Nanyuki and Diani and plans to open in Eldoret next week.