A Graveyard of Failed Retail Chains

The retail chain industry has been a party of failing supermarkets, preceded by long tales of mismanagement and embezzlement of funds. Their stories tell like a scene from a Wall Street thriller, heralding the fall from grace and eventual collapse of some of the greatest retail chains in Kenya. Many of those that remain today fade in comparison to the vision of the future that their founders had for them and the industry a shell of what it once used to be.

In its heyday, the retail chain sector was dominated by three large retail chains; Nakumatt, Tuskys and Uchumi. They had a reach of over 160 stores spread across Kenya, Uganda, Rwanda and Tanzania. Uchumi was listed on the Nairobi bourse in 1922 and Tuskys and Nakumatt were in negotiations for a merger in 2017 that would see the retail giants listing on the Nairobi Stock Exchange. The chains jostled for space in all major towns in Kenya and stores were healthily stocked with an assortment of local and international essential and non-essential goods.

All good things must come to an end, goes the adage, and Kenya’s retail industry is on its knees, seemingly on a steady path to a sorry end. The sector has been an orgy of poor management practices characterised by a disregard to commitments to suppliers and creditors. In recent years, these big retail chains have been haunted by lawsuits, hue and cry from unpaid suppliers and creditors, and rows of empty shelves, evidencing poor corporate culture.

Uchumi, started in 1975 in concert with government efforts to support the efforts of African entrepreneurs, was delisted from the bourse in 2006 and has survived a number of insolvency attempts. The supermarket, which was seen as a symbol of national identity, underwent a rescue campaign where the public was encouraged to help the chain relive its glory days by promoting purchase from the chain which saw the turnaround of the fates of the firm and consequent relisting in 2011. Nevertheless, the company continues to trade as one of the worst companies on the exchange and is trailed by debts of up to Ksh 7.6 billion and has been dubbed one of the greatest failures in Kenya’s corporate landscape.

Nakumatt, which for a while was the most prestigious chain in East Africa has been saddled by woes taking the shape of misuse of funds to line directors pockets and involvement in money laundering. The relatives at the helm of the company were implicated in the Charterhouse Scandal which turned out to be one of the largest money laundering schemes in Kenya. The bank collapsed with Nakumatt holding accounts with figures to the tune of Ksh 123 million. The formerly largest retail chain in Kenya, preceded by a swamp of demands from creditors, suppliers and landlords over unpaid dues, went into liquidation in 2017 with debts totalling to Ksh 38 billion. The court attached properties of the chain’s CEO and sons who were directors to recover at least Ksh 3 billion.

Most recent to the list is Tusky’s Supermarket which shares beginnings with Nakumatt. Boardroom wars and family feuds have brought to light claims of repeated episodes of funds vanishing from the chain’s coffers, tax evasion by its directors and heavy involvement in the Charterhouse Scandal where never-to-be recovered billions of shillings were buried in the rubble of the collapsed bank. The chain is now facing threats of liquidation after a familiar narrative of unpaid dues to landlords, suppliers and creditors. This was even as an aggressive expansion effort continued in total disregard of the interest of shareholders and employees, sharply contrasted with the heavy restructuring and layoffs that have been aggravated by the COVID-19 pandemic.

International chains such as South African retail giant Shoprite and Botswana’s Choppies have also fallen to Kenya’s haunted retail sector, having to close shop and exit the market less than 5 years after entry, to seemingly suggest that no one is to be spared.

A number of local and international chains continue to operate with a steely determination even as their larger, older counterparts continue to fall by the wayside. It is, however, yet to be seen if they too shall succumb to the nettle-some problems choking Kenya’s retail chain sector, for an unceremonial burial in a graveyard filled with fallen giants.