Uchumi Failure
uchumi failureFebruary 2009 Njuguna G. Amos. amnjuguna@usiu.ac.ke
Uchumi Supermarkets Limited
Uchumi Supermarket Limited (USL) was established as a wholly government-owned company from three existing stores in Nairobi in 19751. USL became a public company traded on the Nairobi Stock Exchange in 1992 when the Kenya government divested 48% of its shares. However, the Kenya government retained 52% of the stock that was held through three state corporations namely; ICDC Investment Company Limited, KWAL Holdings EA Limited and Industrial and Commercial Development Corporation. Each of the three companies was entitled to appoint a member to the USL board every year. This meant that the government continued to influence key decisions of USL even after it was listed at the Nairobi Stock Exchange.
USL as the market leader By June 2002, USL was the market leader with 25 branches in seven urban areas throughout the country (Nairobi, Mombasa, Nakuru, Eldoret, Meru, Karatina, Kisii)2. USL focused on customers from all walks of life and therefore had their stores structured and located differently. Some stores had huge parking grounds and were mainly located along the main highways in Nairobi. The main customers for these stores were those in the high and middle income classes. Smaller stores (5000 – 20000 sq. ft) were located in the residential areas of Nairobi and near the busy bus parks to serve the low income consumers.
USL was the first major chain in Kenya to introduce Fresh Fruits and Vegetable (FFV) items in 1997 in their stores (as part of an overall strategy of building up ‘fresh’
1
www.uchumi.com
Neven, D., Reardon, T., Chege, J., Odera, M,. Weatherspoon, D., & Mwaurs, F,. 2005. Rapid Rise of Supermarkets in Kenya: Impact on the Fresh Fruits and Vegetables Supply System. Partnerships for Food Industry Development. Nichigan State University and Kenya Agricultural Research Institute.
2
1
categories: dairy, meats, bread, FFV). Starting out
Uchumi Supermarkets Limited
Uchumi Supermarket Limited (USL) was established as a wholly government-owned company from three existing stores in Nairobi in 19751. USL became a public company traded on the Nairobi Stock Exchange in 1992 when the Kenya government divested 48% of its shares. However, the Kenya government retained 52% of the stock that was held through three state corporations namely; ICDC Investment Company Limited, KWAL Holdings EA Limited and Industrial and Commercial Development Corporation. Each of the three companies was entitled to appoint a member to the USL board every year. This meant that the government continued to influence key decisions of USL even after it was listed at the Nairobi Stock Exchange.
USL as the market leader By June 2002, USL was the market leader with 25 branches in seven urban areas throughout the country (Nairobi, Mombasa, Nakuru, Eldoret, Meru, Karatina, Kisii)2. USL focused on customers from all walks of life and therefore had their stores structured and located differently. Some stores had huge parking grounds and were mainly located along the main highways in Nairobi. The main customers for these stores were those in the high and middle income classes. Smaller stores (5000 – 20000 sq. ft) were located in the residential areas of Nairobi and near the busy bus parks to serve the low income consumers.
USL was the first major chain in Kenya to introduce Fresh Fruits and Vegetable (FFV) items in 1997 in their stores (as part of an overall strategy of building up ‘fresh’
1
www.uchumi.com
Neven, D., Reardon, T., Chege, J., Odera, M,. Weatherspoon, D., & Mwaurs, F,. 2005. Rapid Rise of Supermarkets in Kenya: Impact on the Fresh Fruits and Vegetables Supply System. Partnerships for Food Industry Development. Nichigan State University and Kenya Agricultural Research Institute.
2
1
categories: dairy, meats, bread, FFV). Starting out