When it started with a single store 51 years ago, Kenyan supermarket chain Chandarana Foodplus predominantly targeted the Asian community. However, over the last two decades it has evolved and now has a culturally diverse clientele. Chandarana runs 10 stores in upmarket suburbs in Nairobi and Mombasa, and plans to double the number of outlets over the next five years.[hidepost=9][/hidepost]
Chandarana was founded by the late Shantilal Mulji Thakkar with 12 employees. Although it now has a strong brand and sells over 30,000 products, the story of Chandarana has often been overshadowed by that of the four biggest supermarket chains in Kenya (Nakumatt, Uchumi, Naivas and Tuskys) which, in total, operate over 140 stores.
Eyeing faster growth
Hanif Rajan, group operations manager, tells How we made it in Africa, “a new era” has come for the retailer, adding it is ready for transformation. A former manager at US retail giant Walmart, Rajan says Chandarana has built a strong foundation over the last five decades and has hired the right people to drive growth in coming years.
“We don’t feel we are in a race to compete and get a million stores going. We are going to grow at a rate that is comfortable. We will, however, be faster than the previous 50 years by certainly upping the pace.”
The family business has taken a different approach from its competitors, focusing primarily on food products and steering clear of white goods such as refrigerators and ovens.
“You will see all sorts of food here, but you will not buy televisions, refrigerators and radios here. We are very food-focused.”
The company chose this model because of “economics of inventory” and to offer customers convenience.
“It means shorter lines, better service, bigger variety and higher quality.”
Chandarana has adopted other strategies to enhance financial efficiency such as opening smaller stores. It also doesn’t have a warehouse.
“You need to have economies of scale to justify warehousing, and that number is 18 stores. We like what we are doing right now; a supplier will bring their product here to the receiving area and in two hours it will be on the shelves,” says Rajan.
The chain has also embraced technology, offering online buying with free delivery.
“Kenyans are known to have two phones each and internet penetration is growing rapidly. That connectivity creates opportunities for e-commerce. [Although] people are buying online… half prefer to pay cash on delivery because of trust issues,” adds Rajan.
2015 a year of capacity building
For Chandarana, 2015 is an important year as it gears for expansion.
“This year is going to be one of capacity building for us. We want to build human resource capacity and improve our supply line capacity as we embark on opening more stores. Our five year plan is doubling the number of our stores. First we need to grow Nairobi and have a strong base here before we go upcountry,” he explains.
He adds that changing lifestyles are having an impact on the consumer and retail industries. For example, well-travelled consumers demand brands they have experienced abroad.
“One of our largest categories is wine,” says Rajan. “People might not go for a Ksh.5,000 (about US$55) bottle, but they do want red wine. We are seeing Kenyans buying chicken, turkey, pre-packed beef [and] even dog meat from the supermarket. The aspirational buying is there, and the footfall is definitely increasing in our stores.”